The average monthly wholesale spot natural gas price at the U.S. benchmark Henry Hub fell by 20% to $2.56 per million British thermal units (MMBtu) between January and June of this year, according to data from Refinitiv Eikon. In January, the Henry Hub price averaged $3.18/MMBtu, then dropped to $1.49/MMBtu in March, marking the lowest average monthly inflation-adjusted price since at least 1997. In addition, prices from February through April 2024 were the lowest ever recorded for these months.

Prices declined throughout much of 2023 amid record U.S. natural gas production, flat natural gas consumption, and relatively high natural gas inventories. A mild winter rounded out 2023, leading to even lower prices in early 2024.

Production
U.S. dry natural gas production averaged 106 billion cubic feet per day (Bcf/d) in November and December—the most ever produced—at a time when warmer-than-usual temperatures meant less natural gas was consumed for space heating.

However, natural gas production began to decrease in the first half of 2024, following a decline in mid-January due to Winter Storm Heather and historically low prices. Total dry natural gas production fell to 101.6 Bcf/d in April, the least since December 2022 (100.2 Bcf/d). As a result, less natural gas has been injected into U.S. storage than average so far this injection season (April–October), with May and June injections averaging 11% and 31% below their respective five-year averages, although inventories remain above their previous five-year range. As production has decreased and inventories are nearing the range of the previous five years, prices have increased from February and March but remain near historic lows.

Consumption
According to the National Oceanic and Atmospheric Administration, December 2023 was the warmest December on record in many U.S. locations, and December is when most households typically use natural gas for space heating. In December 2023, natural gas consumption in the residential and commercial sectors averaged a combined 34 Bcf/d, 19% less than December year-ago levels.

Storage
Because of high production and flat consumption, less natural gas was withdrawn from storage inventories this winter. Over the winter 2023–24 heating season (November 1–March 31), U.S. working natural gas inventories averaged 13% more than the year-ago average and nearly 18% more than the five-year (2019–23) average, according to our Weekly Natural Gas Storage Report. Relatively full storage contributed to lower natural gas prices over this heating season. In our most recent report for the week ending July 12, 2024, 17% more natural gas was in working U.S. storage than the previous five-year average for this time of the year.

Source: EIA by Andrew Iraola