UBS Analysts Predict Natural Gas Price Increase in 2025 to Support Export Demand
In a recent note, UBS analysts highlighted the need for higher natural gas prices in 2025 to sustain stronger export demand. Despite recent price increases, the market dynamics require further price hikes to balance supply and demand, especially with the growth in exports and market rebalancing efforts.
The climb in US natural gas prices in August was a result of producers cutting output due to low prices, coupled with increased demand in the power sector. This has led to a gradual rebalancing of the market, although inventories still remain above the five-year average.
UBS has revised its natural gas price forecasts downward due to delays in new export terminals and potential disruptions from weather events. The analysts now expect the Golden Pass export terminal to start around end-2025, pushing back the timeline for a price recovery.
Despite these challenges, UBS maintains that prices need to rise in 2025 to support export demand. However, they caution that weather events, such as a mild or severe winter, could further impact prices. High roll costs and market uncertainties are also factors to consider, leading UBS to advise investors to stay on the sidelines in the short term.
In conclusion, it is important for investors to keep an eye on natural gas prices in 2025 as they are expected to rise to support export demand. Factors such as weather events, delays in export terminals, and market uncertainties can influence price trajectories, so caution is advised in making investment decisions.