GILLETTE, Wyo. — The Energy Information Administration (EIA) anticipates a prolonged period of low natural gas prices extending into 2024, attributing this trend to heightened production and decreased consumption.
As per the EIA’s most recent short-term energy outlook, natural gas prices are forecasted to average $2.80 per million British thermal units. This projection reflects a remarkable decline of over 60% from previous estimates, although it stands higher than the actual recorded natural gas prices in November.
During the previous month, the average natural gas price settled at $2.71 MMBtu, marking a 27-cent decrease from October. Notably, dry natural gas production exhibited an upward trajectory, averaging 105 billion cubic feet per day. This represents a record high for any month, and the EIA foresees this upward production trend persisting throughout the remainder of the winter, according to the outlook.
The surge in natural gas production has resulted in an increased U.S. storage level at the onset of the winter season, reaching 3,800 billion cubic feet. This figure is 5% higher than the five-year average, as highlighted by the EIA. The agency notes that the mild winter weather observed in November contributed to a reduction in natural gas consumption. The EIA predicts that storage inventories will continue to surpass the five-year average throughout 2024.
The outlook further indicates that consumption is projected to be 2% lower than the five-year average, aligning with the EIA’s winter weather forecast. This forecast anticipates normal weather conditions with 44 fewer heating degree days. However, the EIA underscores the potential for an increase in consumption if temperatures turn colder than expected. Additionally, extreme winter weather events or prolonged cold temperatures could lead to more significant disruptions in the natural gas market, according to the EIA.