Natural gas prices plummet in ’23:EIA

High production, warmer winter offset increase in demand

Benchmark Henry Hub natural gas price averaged US$2.57 MMBtu in 2023, about a 62% drop from the 2022 average annual price, the U.S. Energy Information Administration (EIA) reported, citing data from Refinitiv Eikon.

Record-high natural gas production, flat consumption, and rising natural gas inventories contributed to lower prices in 2023, the EIA said. The monthly average Henry Hub price was below $3.00/MMBtu in every month except January, with the lowest monthly average in May at $2.19/MMBtu.

Record-high natural gas production that outpaced growth in natural gas consumption was the primary driver of lower prices in 2023, the EIA found.

“We estimate that U.S. dry natural gas production averaged a record-high 104 billion cubic feet per day (Bcf/d) in 2023 in our December Short-Term Energy Outlook, 4% higher than the 2022 annual average,” the EIA stated. “Production increased in the Permian region, driven by improved well-level productivity and higher crude oil prices in 2023, as well as in the Haynesville region and the Appalachia region, according to our Drilling Productivity Report.”

Overall, natural gas demand increased by 3% in 2023 compared with 2022. Increased exports and a slight increase in natural gas consumed for electricity generation offset lower residential and commercial sector consumption. Liquefied natural gas exports rose 12% in 2023 compared with 2022, and natural gas exports by pipeline increased 9% over the same period.

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