We expect Henry Hub natural gas spot price to average under $3.00/MMBtu in 2024 and 2025

California leads the United States

 


In-brief analysis

January 11, 2024



Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO), January 2024

We expect the U.S. benchmark natural gas spot price at the Henry Hub to average under $3.00 per million British thermal units (MMBtu) in 2024 and 2025 in our January Short-Term Energy Outlook (STEO). The annual average Henry Hub prices in 2024 and 2025 increase from 2023 in our forecast because we expect natural gas demand growth to outpace natural gas supply growth. Despite increased demand, our forecast prices for 2024 and 2025 are less than half the annual average price in 2022 and are only slightly higher than the $2.54/MMBtu we reported for 2023.

After averaging just under $6.50/MMBtu in 2022, the Henry Hub price declined to $3.27/MMBtu in January 2023, driven by warmer-than-average weather and reduced natural gas consumption in most of the United States. The Henry Hub price remained relatively low for all of 2023 because of strong natural gas production and more natural gas in storage.

We expect these drivers of low prices to continue over the next two years, as U.S. natural gas production remains relatively flat but grows enough to set new record highs. In our January STEO, U.S. dry natural gas production increases 1.5 billion cubic feet per day (Bcf/d) in 2024 from record highs in 2023 to average 105.0 Bcf/d. We forecast dry natural gas production increases again in 2025 by 1.3 Bcf/d to average 106.4 Bcf/d. Working natural gas inventories were above the previous five-year (2018–22) average for all of 2023, and we expect inventories will remain above the five-year average in 2024 and 2025 because of continued increases in natural gas production.



Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO), January 2024Note: In the annual total for 2023, November and December are STEO estimates. Supply is dry natural gas production and imports. Demand is total natural gas consumption and exports.

We also expect U.S. demand for natural gas—total natural gas consumption plus natural gas exports—to increase in 2024 and 2025, driven by growth in liquefied natural gas (LNG) exports, which we forecast to increase by 4% (0.5 Bcf/d) in 2024 and 17% (2.1 Bcf/d) in 2025. Consumption of natural gas in 2024 increases in the residential sector by 4% (0.5 Bcf/d) and in the commercial sector by 3% (0.3 Bcf/d) because we expect colder winter weather than in 2023. Last year started and ended with warmer-than-average temperatures.

In our forecast, U.S. consumption of natural gas in the electric power sector also increases modestly in 2024 by 1%. These increases in consumption are partially offset by less consumption in the industrial sector. U.S. consumption of natural gas in our forecast during 2025 is flat relative to 2024 levels in all sectors except for the electric power sector where we expect consumption to decrease by 0.2 Bcf/d.

In 2024, we expect U.S natural gas demand to increase more than supply—dry natural gas production plus natural gas imports—pushing up the average annual price in 2024 slightly. However, we expect prices to stay relatively low in 2024 because of strong natural gas storage inventories. We expect demand growth will exceed supply growth again in 2025, driven by more LNG exports, putting upward pressure on prices in 2025.

Principal contributor: Corrina Ricker

 

We expect the U.S. benchmark natural gas spot price at the Henry Hub to average under $3.00 per million British thermal units (MMBtu) in 2024 and 2025 in our January Short-Term Energy Outlook (STEO). The annual average Henry Hub prices in 2024 and 2025 increase from 2023 in our forecast because we expect natural gas demand growth to outpace natural gas supply growth. Despite increased demand, our forecast prices for 2024 and 2025 are less than half the annual average price in 2022 and are only slightly higher than the $2.54/MMBtu we reported for 2023. 

About Stu Turley 3424 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.