Natural gas prices to remain lower in 2024

Energy

by Jeff Della Rosa ([email protected]) March 13, 2024 12:22 pm 1,201 views 

Benchmark Henry Hub spot prices are projected to average about $2.25 per million British thermal units in 2024, according to the U.S. Energy Information Administration (EIA). That’s a decrease of 10% from 2023 and 65% from 2022.

The EIA released Tuesday (March 12) the Short-Term Energy Outlook for March, which shows U.S. natural gas inventories will be more than 30% higher than average at the end of the winter season following lower winter demand.

Lower natural gas prices are expected to contribute to lower U.S. natural gas production in 2024 compared with record production last year.

“Some producers have announced curtailments in production or reductions in upstream spending on natural gas-directed activities this year,” said EIA Administrator Joe DeCarolis. “But with so much domestic natural gas production tied to growing crude oil production, we expect natural gas production to decrease far more slowly than prices have.”

U.S. crude oil production is expected to continue to rise in 2024 and 2025, with both years exceeding the record level set in 2023. The production growth should help to offset the effects of continued voluntary OPEC+ oil production cuts announced this week. Still, a tight balance of global oil production and demand will contribute to higher Brent crude oil prices in 2024 than expected at the start of the year.

“Some significant sources of uncertainty remain in our crude oil forecasts, including how the Red Sea conflict could affect production and how strictly OPEC+ members will adhere to their voluntary production cuts,” DeCarolis said.

Following are other highlights from the Short-Term Energy Outlook:

  • U.S. driving activity to rise to record highs in 2024 and 2025. In 2023, U.S. motorists drove 8.9 billion miles per day, exceeding the 2019 record high. Despite a rise in driving activity, motorists are expected to consume less gasoline on average because of vehicle efficiency improvements.
  • Gasoline prices are expected to average about $3.50 per gallon in 2024, slightly lower than in 2023. The EIA changed its forecast for gasoline prices in response to higher crude oil prices.
  • Utility-scale solar generation is expected to provide 6% of U.S. electricity generation in 2024, up from 4% in 2023. The increase was attributed to a rise in solar generating capacity, which is expected to jump by 36 gigawatts.
  • U.S. coal exports will rise by 1% in 2024 and by 5% in 2025. Coal consumption by the U.S. electric power sector continues to fall.