EIA sees sharp drop in natgas price in 2023
The US Energy Information Administration (EIA) expects a warmer than normal start to the year will translate into a 47% drop in the average US natural gas price this year, it said February 7.
In its February Short-Term Energy Outlook (STEO), the EIA is forecasting a 2023 Henry Hub average price of $3.40/mn Btu, down from the 2022 average of $6.42/mn Btu. The price will rebound somewhat in 2024, to a projected average of $4.40/mn Btu.
“US natural gas inventories fell by less than our expectations in January because of the warmer-than-average weather,” EIA administrator Joe DeCarolis said. “With more natural gas in inventory, we reduced our forecast for natural gas prices over the coming year.”
He warned that “a lot of uncertainty” remains, including the potential later this winter of extreme weather that could push demand higher or temporarily slow production, “but those possibilities decrease as we approach spring.”
Warmer than expected temperatures, the continued loss of demand from the Freeport LNG facility, idle since a June 2022 fire, and higher production pushed January natural gas storage volumes above the five-year average, the EIA said. It projected inventories will end the withdrawal season on March 31 at more than 1.8 trillion ft3, or 16% above the five-year average.