NATURAL

GAS
OUTLOOK
April 2021
Analysis
US Henry Hub
• The disruptions due to the storm Uri and the cold weather in the US caused prices to set a high record in February
2021. But it has declined to $2.62/MMBtu over March 2021.

• The US Henry Hub is expected to rise to $2.71/MMBtu in the second quarter of 2021, and $3.04/MMBtu over 2021.
Rising liquefied natural gas (LNG) exports and increasing industrial consumption due to growing economic activities
are the supportive factors.
Alberta

• Lower domestic demand combined with the reduced pipeline exports to the United States made the Albertan natural
gas prices fall by cents0.37/MMBtu to $2.14/MMBtu in March 2021, from $2.51/MMBtu in February.

• The growing renewable capacity and rising coal-to-gas conversions in Alberta are putting downward pressure on the
electricity demand, forcing it to take just a little growth in the coming months. It is expected the Alberta natural gas
price to reach $2.61/MMBtu in May 2021. Approaching to warm season and a recovery in industrial activities are
making the demand to gradually return to pre-pandemic levels.

Natural Gas Outlook, April 2021 2

Analysis
Netherland TTF Index
• Lower heating demand and the high natural gas storage levels have caused the TTF spot gas price to decline to
$6.13-MMBtu over March 2021.

• The TTF spot gas price is expected to increase to $6.87/MMBtu by the end of 2021, supported by falling temperatures
and lower Norwegian supply. Price spreads with Asian spot LNG are expected to remain tight over the summer,
indicating a potentially higher LNG influx into Europe.

UK NBP

• The UK NBP price rise by more than cents50/MMBtu over March 2021, decreaing the spread between Dutch (TTF)
gas price. The weaker spread means the lower encourage for importing towards the UK.

• It is expected the UK NBP prices to rise over Q2 2021 when the rising temperature starts and continued in Q3 2021
when the industrial activities will make a recovery. However, we expect the recovery to be slow because of the high
volumes of gas accumulated in the European underground storage facilities.

Natural Gas Outlook, April 2021 3

Analysis
Japan LNG CIF
• The strong gas demand from power plants due to the low nuclear and solar power availability and cold weather in
Japan caused the LNG imports to increase by 14% YoY over Q1 2021, and prices to rise to $9.93/MMBtu over March
2021. The rush to secure cargoes propelled Asian spot LNG prices to all-time highs while shipping bottlenecks were
delaying numerous deliveries.

• The Japan LNG CIF price is expected to fall from $9.93/MMBtu in March 2021 to $7.63/MMBtu in May 2021, because
of the decreasing gas demand as nuclear plants restart and Japan’s second state of emergency imposed since
January.

Japan Korea Marker

• Lower heating demand due to higher temperature put downward pressure on the Japan Korea Marker (JKM), which
declined to $6.36/MMBtu over March 2021.

• The Japan Korea Marker (JKM) is expected to rise over the year and also Q1 2022, because of the increasing total gas
consumption mainly driven by economic recovery and rising coal-to-gas substitution in the power sector.

Natural Gas Outlook, April 2021 4

Natural Gas
US Henry Hub
US Henry Hub Historical Price US Henry Hub Price Outlook
5.50 3.20

5.00
3.10

4.50
3.00
4.00
$/MMBtu

$/MMBtu
2.90
3.50

3.00 2.80

2.50
2.70

2.00
2.60
1.50
2.50
Mar-21 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: EIA Source: ANN Model based on EIA data*

*ANN: Artificial Neural Network Model. The model used by PetroView to forecast Natural Gas Prices.

Natural Gas Outlook, April 2021 6

Alberta
Alberta Historical Price Alberta Price Outlook
2.60 2.70

2.40
2.60

2.20
2.50
2.00
$/MMBtu

2.40

$/MMBtu
1.80

1.60 2.30

1.40
2.20

1.20
2.10
1.00
2.00
Mar-21 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: Oil Sands Magazine Source: ANN Model based on Oil Sands Magazine data*

Natural Gas Outlook, April 2021 7

Netherlands TTF Index
Netherlands TTF Historical Price Netherlands TTF Price Outlook
8.00 7.50

7.00
7.00

6.00
6.50
5.00
$/MMBtu

6.00

$/MMBtu
4.00

3.00 5.50

2.00
5.00

1.00
4.50
0.00
4.00
Mar-21 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: World Bank Source: ANN Model based on World Bank data*

Natural Gas Outlook, April 2021 8

UK NBP
UK NBP Historical Price UK NBP Price Outlook
5.60 5.90
5.40
5.20
5.40
5.00
4.80
4.60 4.90
$/MMBtu

$/MMBtu
4.40
4.20
4.00 4.40

3.80
3.60
3.90
3.40
3.20
3.40
Mar 2021 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: Barchart Source: ANN Model based on Barchart data*

Natural Gas Outlook, April 2021 9

Average Futures Prices of Four Key Hubs
Average Natural Gas Futures Prices
4.60

4.40

4.20
$/MMBtu

4.00

3.80

3.60

3.40
Mar-21 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: ANN Model based on EIA, Oil Sands Magazine, World Bank and Barchart data*

Natural Gas Outlook, April 2021 10

Methodology
Methodology
Pricing Formula for Petrochemical Feedgas
• Feedgas Price= 50% of weighted average of the domestic sales prices to other gas consumer (power, residential,
commercial and transportation) + 50% of average gas prices in the four key hubs.
• According to the formula, the price of feedgas has been affected by both internal and worldwide gas prices. The first
part of formula is linked to the domestic gas prices which is weighted average of total amount of internal
consumption, export and import of natural gas. The second part also affected by international gas prices which is
traded at the natural gas trading hubs including Henry hub, Alberta, NBP and TTF. The higher and lower price belong
to the markets of Europe and America respectively.
Artificial Neural Network (ANN)
• The Artificial Neural Network (ANN) is a mathematical method that aims to simulate the human brain in the
knowledge acquisition process, with successful applications in nonlinear mapping between input and output variables,
pattern recognition and classification, optimization. In this report, a prediction method is developed using Neural
Network Auto-regressive (NNAR) algorithm. The performance of the developed model was assessed through a
measure of Mean Error (ME), Mean Absolute Error (MAE), Root Mean Square Error (RMSE), Mean Percentage Error
(MPE), Mean Absolute Percentage Error (MAPE), Mean Absolute Scaled Error (MASE). Hence, the accuracies reached
with our method is outstandingly high, 91%, 95.2% and 97.6% respectively. So it has high adaptability and prediction
accuracy for short-term prediction of natural gas prices, and can more accurately reflect the short-term variation of
natural gas prices.

Natural Gas Outlook, April 2021 12

Appendix
Japan LNG CIF
Japan LNG CIF Historical Price Japan LNG CIF Price Outlook
11.00 12.00

10.00
11.00

9.00
10.00
8.00
$/MMBtu

$/MMBtu
9.00
7.00

6.00 8.00

5.00
7.00

4.00
6.00
Mar-21 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: World Bank Source: ANN Model based on World Bank data

Natural Gas Outlook, April 2021 14

Japan Korea Marker (JKM)
Japan Korea Marker Historical Price Japan Korea Marker Price Outlook
8.00 7.80

7.50 7.60

7.00 7.40

6.50
7.20
$/MMBtu

$/MMBtu
6.00
7.00
5.50
6.80
5.00
6.60
4.50
6.40
4.00
6.20
Mar-21 Apr-21 May-21 Jun-21 3Q2021 4Q2021 1Q2022

Source: Barchart Source: ANN Model based on Barchart data

Natural Gas Outlook, April 2021 15

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