Energy Information Administration [EIA] has reduced its earlier forecast for natural gas prices for 2023 and 2024. The EIA now sees natural gas prices averaging $3.02 per MMBtu this year, down 11.2% from its previous forecast of $3.40 per MMBtu.
According to the latest edition of the Short-Term Energy Outlook [STEO] released on Tuesday, for comparison, natural gas prices averaged $6.42 per MMBtu in 2022.
The EIA has also lowered its forecast for natural gas prices for next year, to $3.89 per MMBtu, down from its estimate of $4.04 per MMBtu made its previous report.
The EIA sees natural gas consumption averaging 99.1 billion cubic feet per day in Q1, down 5% from the same quarter last year on the back of “very mild temperatures that have reduced demand for space heating.”
The EIA sees the largest decline in residential and commercial natural gas consumption. With this anticipation of lower natural gas consumption, the EIA now expects the United States will close the withdrawal season at the end of March with more than 1.9 trillion cubic feet of natural gas in storage—a figure which is 23% more than the five-year average and 27% more than what the EIA forecast in its January STEO.
The EIA said that preliminary data from the National Oceanic and Atmospheric Administration for January and February indicate the first two months of 2023 may be close to the warmest on record for that period in data going back to 1895.
The mild weather was concentrated in the eastern part of the United States. Natural gas prices fell 12% on Monday—the largest drop since January 30—driven by forecasts for milder weather and lower heating demand.
By Ken Okafor