EIA: U.S. Natural Gas Prices Expected to Rise in Back Half of ‘23
U.S. natural gas prices are expected to get a lift later this year while WTI crude prices stay relatively flat, according to the latest outlook by the U.S. Energy Information Administration.
Chris
Mathews
Hart Energy
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U.S. natural gas spot prices are expected to rise in the second half of 2023 as E&Ps continue to face a volatile commodity market and operators pull back production, according to new Energy Information Administration (EIA) forecasts.
Henry Hub spot prices could increase to a monthly average of nearly $2.60/MMBtu in July, a 19% increase compared with average gas spot prices seen in June, the EIA reported in its latest Short-Term Energy Outlook published July 11.
The EIA expects Henry Hub gas spot prices to average more than $2.80/MMBtu in the second half of 2023, up from around $2.40/MMBtu during the first half of the year.
“U.S. dry natural gas production has been relatively flat in recent months, a production trend we expect to generally continue for the rest of this year,” the EIA said in its report. “With flat production and year-over-year growth in natural gas consumption, we expect U.S. natural gas inventories will reduce the surplus to the five-year average, which will put upward pressure on prices.”
Gas producers saw prices rise above $9/MMBtu in the summer of 2022 but have since faced an oversupply in the market, weakened demand and higher-than-expected levels of gas storage.
Henry Hub prices are expected to average $2.62/MMBtu during 2023—down almost 60% from an average of $6.42/MMBtu in 2022.
Natural gas output from Appalachia—the top gas-producing region in the Lower 48—grew by around 72.5 million cubic feet per day (MMcf/d) month-over-month from May to June, but is expected to rise by only 25 MMcf/d from June to July, per EIA figures.
The forecast has Haynesville Shale gas production growing by about 4 MMcf/d to a record 16.645 Bcf/d in July. But production in the gassy basin had grown by nearly 75 MMcf/d in the previous month.
The EIA anticipates crude oil prices rising gradually in the coming months and into 2024 as global crude inventories decline.
Brent crude prices will average $78/bbl in July, up from an average of $75/bbl over the past two months.
Rising crude demand and the effects of production cuts by Saudi Arabia and the OPEC+ cartel are expected to provide a lift to oil prices, the EIA said. Brent spot prices are forecast to rise to $81/bbl by the end of the year and average $84/bbl in 2024.
U.S. crude prices aren’t expected to see much of a lift—West Texas Intermediate spot prices will average around $74/bbl in the back half of 2023, roughly flat from the first half of the year.
WTI spot prices should rise to average around $78.51/bbl in 2024, per EIA figures.
West Texas Intermediate spot prices will average around $74 per barrel in the back half of 2023. (Source: Energy Information Administration July 2023 Short-Term Energy Outlook)
