The U.S. natural gas spot price is projected to average higher in 2024 and 2025 compared with last year but will remain below the $3.00-per-million British thermal units (MMBtu) mark, the U.S. Energy Information Administration (EIA) said on Monday.
“We forecast increases in natural gas prices as demand for natural gas grows faster than supply in 2024,” the agency said.
Last year, U.S. natural gas futures recorded their biggest percentage fall since 2006, under pressure from record production, ample inventories in storage and relatively mild weather.
Front-month gas futures for March delivery on the New York Mercantile Exchange fell 1.5 cents, or 0.8%, at $1.83 mmBtu.
EIA projects demand to increases by 2.3 billion cubic feet per day (Bcf/d), and supply to remain relatively flat this year. In 2025, it expects supply and demand to grow at similar rates, but supply will still slightly exceed demand.
EIA expects 11% more U.S. natural gas consumption for electricity this year than the previous five-year average and highlighted that industrial sector will likely be the only sector where consumption will decrease slightly.
Domestic natural gas production and imports surpassed the rise in demand in 2022 and 2023.
“We expect natural gas inventories to remain high relative to their previous five-year average throughout 2024 and 2025,” the EIA added.
The agency noted that if U.S. crude oil production is less than expected, it would translate into less natural gas production than current projections.
(Reporting by Ashitha Shivaprasad in Bengaluru; editing by Jonathan Oatis)