The average monthly spot natural gas price at the US benchmark Henry Hub fell 34%, or $1.12/MMbtu, to $2.18/MMbtu between January and June, the US Energy Information Administration (EIA) said July 24, citing data from Refinitiv Eikon.
The Henry Hub price averaged $3.30/MMbtu in January on an inflation-adjusted basis and then dropped below $2.50/MMbtu starting in February, EIA said. Relatively mild temperatures, record production, and higher-than-average inventories reduced natural gas prices. When adjusted for inflation, this year has seen the lowest average monthly Henry Hub price since June 2020.
Relatively mild winter temperatures reduced demand for space heating across most of the US in first-quarter 2023, reducing natural gas consumption. The West Census Region was the only part of the Lower 48 states to experience relatively colder winter temperatures this winter than last winter, EIA said.
US natural gas consumption averaged 103 bcfd between Jan. 1 and Apr. 30, 2023, down 1.0 bcfd from the same period in 2022, according to EIA’s Natural Gas Monthly. The decline was led by the residential and commercial sectors, where combined consumption fell 18% in January and 12% in February 2023 compared with the same months in 2022.
Industrial natural gas consumption also decreased, falling 3% in first-quarter 2023 compared with first-quarter 2022. The electric power sector, which consumes more natural gas than any other sector, used a record-high average of 30.78 bcfd between January and March 2023, up 8.4% compared with the same period in 2022, EIA said. The increase was driven by the increased winter heating demand in the West.
US dry natural gas production has outpaced demand so far in 2023, EIA said, contributing to lower natural gas prices. Dry natural gas production has remained at record highs in 2023, averaging over 101.0 bcfd each month. In first-quarter 2023, dry natural gas production increased 7%, or 6.9 bcfd, from the same period in 2022.
EIA forecast Henry Hub prices will increase from the current price between July and December 2023, averaging $2.83/MMBtu through end-2023, according to its July Short-Term Energy Outlook. EIA expects the price to peak at $3.44/MMBtu in December, up from $2.18/MMbtu in June. EIA also expects consumption will rise to 107 bcfd in December 2023, a 2.1 bcfd decrease from December 2022. Dry natural gas production is expected by EIA to average 102.6 bcfd (July to December).
