Spring may be in the air — and the natural gas market in the doldrums — but higher prices are on the way later this year and next amid tighter storage balances and a steep ramp-up in liquefied natural gas (LNG) exports ahead of next winter, according to Barclays Commodities Research.

The firm has raised its 2019 price forecast to $2.87/MMBtu, up 9 cents from its month-ago projection, and its 2020 forecast to $2.92, up 5 cents.

As for its 2019 outlook, Barclays analysts believe the expected price rally may be delayed until closer to the fall, based on last year’s trading activity when storage deficits were also steep following the 2017-2018 winter season. The firm expects a fairly flat price trajectory through the third quarter, with Henry Hub averaging $2.79, “as summer trading in recent years has become increasingly placid.

Between 2010 to 2018, the summer trading range of the prompt New York Mercantile Exchange contract “tightened by nearly 65% as production growth dampened volatility,” Barclays analyst Samuel Phillips said. “If this year is a case of ”pay now or pay later,’ we think the market will pick the latter.”

A late-season cold spell reduced the firm’s end-March storage projection to 1.1 Tcf, a drop of about 300 Bcf from its month-ago forecast. The end-March carryout is set to be about 550 Bcf below the five-year average, the lowest since the polar vortex winter of 2014.

Meanwhile, the lower storage baseline also reduced the firm’s expectations for end-October to 3.3 Tcf, which would rival last year’s 13-year low of 3.2 Tcf.

Unlike last year, however, production growth next winter should not provide as much of a counter-balance to low inventories, according to Barclays. The firm is forecasting year/year gains of around 3.5 Bcf/d next winter, less than half the record-setting 8 Bcf/d-plus increases seen during the past five months. Appalachian producers appear to be tightening the reins on growth this year, while Kinder Morgan Inc.’s Gulf Coast Express could fill up quickly, constraining Permian Basin gas production yet again.

“This combination of lower storage and slowed production growth has increased our conviction that higher volatility and prices await next winter,” Phillips said.

Cumulatively, the firm has raised its Henry Hub price forecast through 1Q2020 by an average of 10 cents, with the bulk of its price increase occurring in 4Q2019, which it raised 20 cents.

Meanwhile, the steep ramp-up in LNG exports expected ahead of next winter should exacerbate the volatility from tighter balances, according to Barclays. With five terminals expected online over the next year or so, the firm expects exports to nearly double to roughly 10 Bcf/d. “This increased connectivity with the global gas market adds risks to forecasting,” Phillips said.

Barclays joined Societe Generale in noting the potential impact tight storage and rising LNG exports have on domestic prices. Earlier this month, Societe Generale indicated there was increased upside price risk on core summer 2019 and winter 2019-20 contracts. A hot summer could easily support stronger power generation levels than assumed in the firm’s base case, and put storage on a trajectory comparable to the low last year.

However, Societe Generale analysts viewed LNG exports as the biggest downside price risk. “We see the global gas market moving into a period of oversupply, and with the United States playing the role of marginal supplier, there is risk for reduced utilization of U.S. export facilities,” natural gas analyst Breanne Dougherty said.

The firm is assuming an average 90% utilization of LNG export facilities through 2020. If utilization were to fall to average even 75%, it would lower its 2019 price outlook by a dime.

The U.S. Department of Energy (DOE) is accepting comments through April 11 on a proposed amendment to Port Arthur LNG LLC’s application for long-term authorization to export gas worldwide. In a filing last October, the Sempra Energy subsidiary requested to increase the export volume by 181 Bcf/year to a total requested volume of 698 Bcf/year, or 13.5 million metric tons/year (mmty.)

This proposed increase would align Port Arthur LNG’s requested export volumes with the requested liquefaction capacity for the project in its application filed with FERC. A positive final environmental impact statement (EIS) was issued last month by the Federal Energy Regulatory Commission for the Texas facility. Port Arthur finalized a supply and purchase agreement in December to provide Polish Oil & Gas Co. with 2 mmty over 20 years, and a final investment decision is expected later this year.

Meanwhile, another Texas project continues to progress after securing two key approvals. FERC issued a positive final EIS for the proposed Texas LNG export project, near Brownsville on the Texas border with Mexico. In its March 15 notice, federal regulators said that approval of the 4 mmty project would result in adverse environmental impacts, but mitigation measures could be avoided or minimized.

FERC said the Texas LNG project, combined with other projects in the geographic scope, including the Rio Grande LNG and Annova LNG projects, would result in significant cumulative impacts from sediment/turbidity and shoreline erosion within the Brownsville Ship Channel during operations from vessel transits, as well as on other areas.

FERC also issued a positive final environmental assessment for the proposed facility. The initial phase would have 2 mmty of capacity, with the potential to double it in a proposed second phase. The terminal would be fed via a proposed intrastate pipeline accessing supply from the Agua Dulce hub near Corpus Christi, which is about 150 miles north of Brownsville. Texas LNG plans to announce whether it will sanction the project in late 2019, and if positive, first exports could begin by 2024. The second phase would begin one or two years later.