The Energy Information Administration (EIA) forecasts lower US dry natural gas production for the remainder of the year due in large part to continued lower natural gas prices. Several producers scaled back drilling activities after prices fell to a 3.5-year low in February.
EIA expects production levels to remain steady in March from February at just under 104 Bcf/D, then slight declines for the balance of the year.
“We do not expect that natural gas production will return to its December 2023 record of 106 Bcf/D during the forecast period,” EIA wrote. “Forecast US dry natural gas production averages 103 Bcf/D in 2024, down slightly from 2023. Production increases to 104 Bcf/D in 2025, driven by expected growth in associated natural gas production in the Permian Basin and growth in LNG export demand.”
The Henry Hub spot price is expected to remain below $2.00/MMBtu in the second quarter as the winter heating season ends with natural gas inventories 37% above the 5-year average.
The Henry Hub spot price averaged $1.72/MMBtu in February—30% lower than in EIA's February short-term outlook, a record low adjusted for inflation.
Low prices were partially driven by reduced natural gas consumption in the residential and commercial sectors in the historic winter months November through March.
The agency also projected that low gas prices would boost domestic gas consumption from a record 89.09 Bcf/D in 2023 to 89.68 Bcf/D in 2024 before easing to 89.21 Bcf/D in 2025 as prices rebound.
If the projections are correct, 2024 would be the first output decline since 2020 when the COVID-19 pandemic cut demand.
