U.S. natural gas prices slumped by 34% in the first half of this year, dragged down by record production, high inventories, and relatively mild winter temperatures.
The average monthly spot natural gas price at the U.S. benchmark Henry Hub dipped by 34%, or by $1.12 per million British thermal units (MMBtu), to $2.18 per MMBtu between January and June, per data from Refinitiv Eikon cited by the U.S. Energy Information Administration (EIA) on Monday.
Adjusted for inflation, this year has seen the lowest average monthly Henry Hub price since June 2020, the administration said, noting that prices started slumping in February after averaging $3.30 per MMBtu in January.
Early on Monday, the monthly Henry Hub price was slightly up by 0.18% at $2.716 per MMBtu.
Reduced demand for space heating amid milder temperatures in some parts of the U.S. led to lower natural gas consumption between January and June 2023.
Total U.S. natural gas consumption averaged 103.0 billion cubic feet per day (Bcf/d) between January 1 and April 30, 2023. This was down by 1.0 Bcf/d compared to the same period in 2022, according to EIA’s Natural Gas Monthly overview. The residential and commercial sectors led the decline, with combined consumption down 18% year-on-year in January and 12% in February 2023. Industrial natural gas consumption also dropped, by 3% in the first quarter of 2023 compared with the first quarter of 2022.
However, the electric power sector, which consumes more natural gas than any other sector, used a record-high average of 30.78 Bcf/d between January and March 2023, up by 8.4% year over year, due to increased winter heating demand in the West.
Prices have come under downward pressure as natural gas production has exceeded demand so far this year, the EIA said. T, per the July Short-Term Energy Outlook.
Last week, natural gas prices booked the first weekly gain in four weeks as summer temperatures soared and injections into gas storage sites were smaller than expected in the latest reporting week.
By Tsvetana Paraskova for Oilprice.com
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