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OPEC Lifts Production in February

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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EIA: Soaring Production Will Keep Natural Gas Prices In Check

  • Natural gas prices have shaken off the geopolitical risk premium at the beginning of 2023.
  • EIA: continued increases in U.S. dry gas production are expected to outpace domestic demand plus exports.
  • The EIA expects the Henry Hub benchmark price to average $4.90 per MMBtu this year.

Continued increases in U.S. dry natural gas production are expected to outpace domestic demand and exports this year and in 2024 according to the EIA

Continued increases in U.S. dry natural gas production are expected to outpace domestic demand and exports this year and next, sending the average U.S. benchmark price lower than in 2022, the U.S. Energy Information Administration (EIA) said on Wednesday.

The EIA expects the U.S. benchmark Henry Hub price to average $4.90 per million British thermal units (MMBtu) this year, according to its January Short-Term Energy Outlook (STEO). The projected average would be more than $1.50/MMBtu lower compared to the 2022 average of natural gas prices.

In 2024, Henry Hub prices are expected to remain almost the same compared to 2023 levels, as U.S. production is set to continue growing, the EIA said.

This year, prices are likely to average close to $5.00/MMBtu in the first quarter, due to higher demand in the winter and LNG exports at near-capacity volumes. The return of Freeport LNG after a fire in June 2022 will also drive higher natural gas demand in the first quarter, the EIA said.

As the winter ends in the second quarter of 2023, and as LNG exports will stay flat once Freeport LNG comes back online, natural gas prices are expected to drop in Q2, also because U.S. production will continue to rise, according to EIA’s estimates. 

U.S. natural gas prices are back to reflecting the domestic supply and demand balances, shaking off – for now – the geopolitical premium that ruled the energy and natural gas markets throughout most of 2022 after the Russian invasion of Ukraine in February. 

Early on Wednesday, the U.S. benchmark price was tumbling by 4.10% to $3.433/MMBtu, as demand is light in the U.S. right now.

For the week January 18 to January 24, overall U.S. natural gas demand is expected to be very light through Friday, and then light from Saturday to Tuesday, according to NatGasWeather.com.

By Charles Kennedy for Oilprice.com

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Leave a comment
  • Art on January 18 2023 said:
    No,

    The most mild winter in decades is what kept prices in check.
  • George Doolittle on January 18 2023 said:
    *"helping hand with that"* would be the understatement of all time but yes...producers and pipeline operators and as well the *"Super Chillers"* have all executed with great flaws at first (Chesapeake Energy) but then through truly remarkable market action persevered to win the day upon the entirety of the USA.

    Still so much money created already spent therefore needing moar moar moar this is not nor ever has been right a proper made worse still by #strange #peculiar reaction in Pipeline versus Rail War #ongoing for over a Century now in the USA and needlessly so but of course with so much now ahem *"Real War!"* now ahem who even notices anymore?

    The USA was once always this way but then for a time quite suddenly not as well. Who is there to rally in this time of such egregious treatment for spectacular success and hardly alone be the US natural gas Industry but so much else now as well.

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