In the short term, summer temperatures and air conditioning needs in the United States will shape the initial assumptions used as a basis for continental price forecasts for winter 2021–2022.
In Canada and the United States, natural gas storage levels are above historical averages but still below levels recorded on the same date last year. Given these circumstances, the gas market's mood will be sensitive to supply and demand, as well as storage injections between now November.
In the medium term, the focus will be on fluctuations in gas production and the contribution of natural gas related to oil production. Other factors will also play a role, such as demand for natural gas for liquefaction and exports. Currently at close to full capacity, liquefaction and US exports of natural gas will struggle to grow at the same pace in winter 2020–2021. Temperatures in Asia and European demand will likely have the last word on whether LNG exports stay stable or decline.
Under these circumstances, the markets currently anticipate a price of $3.35/GJ for natural gas at the Dawn hub for 2021 as a whole and $3.40/GJ for winter 2021–2022.
Although these prices are higher than actual prices recorded for previous periods, they are within historical averages. Changes to supply and demand may influence this price outlook, but ultimately, actual temperatures will dictate the final result.