U.S. natural gas supplies fell the most in more than a year as extreme cold weather froze gas wells, while heating demand could fall
It hit a record high on January 16 and pushed electricity and natural gas prices to multi-year highs.
U.S. natural gas production is expected to fall by about 10.6 billion cubic feet per day over the past week. It hit 97.1 billion cubic feet
per day on Monday, a preliminary 11-month low, mainly due to low temperatures that froze oil wells and other equipment.
However, this decrease is small compared with the approximately 19.6 billion cubic feet per day of natural gas supply losses during the
Elliott winter storm in December 2022 and the 20.4 billion cubic feet per day during the February 2021 freeze. .
The U.S. Energy Information Administration forecast expects U.S. benchmark natural gas spot prices at the Henry Hub to average less
than $3.00 per million British thermal units in 2024, an increase from 2023, as natural gas demand growth is expected to outpace natural
gas supply growth. Despite increased demand, forecast prices for 2024 and 2025 are less than half the annual average price for 2022 and
only slightly higher than the 2023 average price of $2.54/MMBtu.
After averaging $6.50/MMBtu in 2022, Henry Hub prices fell to $3.27/MMBtu in January 2023, driven by warmer weather and reduced
natural gas consumption across much of the United States. With strong natural gas production and more gas in storage, prices at the
Henry Hub will remain relatively low throughout 2023.
The U.S. Energy Information Administration expects these low-price drivers to continue over the next two years as U.S. natural gas
production remains relatively flat but grows enough to reach record highs. U.S. natural gas production is expected to increase by 1.5 billion
cubic feet per day in 2024 from a record high in 2023 to average 105 billion cubic feet per day. Dry natural gas production is expected to
increase again by 1.3 billion cubic feet per day in 2025 to average 106.4 billion cubic feet per day. Natural gas inventories for all of 2023
are above the average for the previous five years (2018-22), and inventories in 2024 and 2025 are expected to remain above the five-year
average due to continued growth in natural gas production.