1. He likes mustard. I, however, prefer ketchup.

If the transitional phrase interrupts the sentence, it is separated off with commas.

compare:
He likes mustard. However, I prefer ketchup.

A transitional phrase can only start a sentence.

When "however" appears inside a sentence, it is a type of parenthesis, and it should be offset with commas.

Thank you!

Or: He likes mustard; however, I prefer catsup.