Trading houses expect US natural gas production to increase significantly in 2022 as a response to higher prices. Upstream producers are expected to ramp up drilling, which should make supplies more plentiful in the 2022-2023 winter. As a result, the Henry Hub prices for January 2023 are currently trading around $1.15 per MMBtu in an unusual backwardation against prices for January 2022. Henry Hub's one-year calendar spread typically trades in contango, reflecting the cost of storing the gas.
US gas production stood at 79 Bcm in June, with the number of active rigs increasing to more than 100 by early September. High gas prices are expected to draw even more rigs back into the gas market in the next couple of months, which would boost production in the second and third quarters of 2022. The higher output will also support the growth in US LNG exports to Europe and Asia.
