The U.S. Energy Information Administration (EIA) is projecting a Henry Hub natural gas spot price average at $2.20/MMBtu for 2024, unchanged from the average price the agency modeled a month earlier.
In the May release of its Short-Term Energy Outlook (STEO), published Tuesday, EIA said it expects Henry Hub spot prices to average $3.10 for full-year 2025, creating an incentive for more drilling in dry natural gas production regions.
After starting the year at $2.560, NGI’s Henry Hub next-day natural gas cash price dropped to $1.435 by the end of March. Prices have since recovered some ground, but remain well below year-ago levels around $2, according to NGI’s Daily Historical Data.
Low natural gas prices are reducing natural gas production in the United States, EIA said.
“Production is falling as some producers have announced curtailments because of low natural gas prices,” the agency said. Researchers said that the price differential between natural gas and petroleum products is also encouraging producers to extract higher-value hydrocarbon gas liquids from the natural gas stream.
“We expect dry natural gas production in the United States would be down 1% this year compared with last year,” EIA said.
Production is expected to rise by 2% in 2025 to a record of nearly 105 Bcf/d, driven by forecasts for rising natural gas prices and increased associated gas production from higher crude oil output.
On the demand side, the latest STEO modeled an average of 89 Bcf/d of natural gas consumption for the full-year 2024, in line with year-earlier levels. Small increases are expected in the residential, commercial and electric power sectors. Those are offset by a slight year/year decline in industrial sector demand.
“U.S. electricity generation in our forecast grows in 2024 compared with last year because warmer weather drives air-conditioning demand, manufacturing activity increases, and large-scale data centers and computing facilities expand,” EIA said.
The agency forecast total U.S. generation to grow by 3% in 2024 and 1% in 2025. Despite the increases, 2024 natural gas consumption by the electric power sector is expected to be flat with the record level in 2023.
“The availability of more electricity generation from renewable sources, particularly solar, in 2024 compared with 2023 is preventing growth in natural gas consumption beyond 2023 levels,” researchers said.
