GILLETTE, Wyo. — Natural gas prices should remain low this year with higher-than-normal inventories following a mild winter, according to the Energy Information Administration.
Much of the United States has just come out of the warmest winter on record, a season during which natural gas consumption typically peaks because of its use as a space-heating fuel in residential and commercial sectors, the EIA says.
December 2023, however, was the warmest December on record in many U.S. locations, particularly in the northern and central United States, according to the National Oceanic and Atmospheric Administration.
Temperatures across the northeast and midwest were up as well; commercial and residential sectors consumed 23% less natural gas during December 2023 compared to December 2022, per the EIA, which says mild weather notwithstanding a mid-January winter storm drove down natural gas consumption 6% compared to the previous year and was 7% less than the previous five-year average.
However, while natural gas consumption was down, production reached a record high in November and December, resulting in natural gas volumes 39% higher than the five-year average and low prices, EIA says. The low prices, in turn, spurred several producers to react by announcing current or planned curtailments to production or reductions in capital expenditures toward natural gas-directed activities in 2024, according to EIA.
In March 2024, natural gas production averaged 103 billion cubic feet per day, around four billion cubic feet per day lower than December 2023, per the EIA. If production falls faster than forecast and natural gas consumption increases due to hot weather this summer, inventories could decrease to average levels and prices could go up.
For the first half of 2024, however, natural gas prices should remain below $2 per million British thermal units, though they should climb slightly from the March 2024 low due to production curtailments and increased natural gas consumption. In the second half of 2024, the EIA predicts prices will increase to $2.20 per MMBtu.
