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Milder weather and decreased demand resulted in U.S. natural gas spot prices averaging in 2020 the lowest in decades, since at least 1997, data from the Energy Information Administration (EIA) showed on Thursday.
Early in 2020, demand for heating was lower than usual due to milder winter weather, while declining demand with lower economic activity during the pandemic dragged down consumption, production, and spot prices of natural gas for the remainder of the year.
The average spot price of natural gas at the Henry Hub, the U.S. benchmark was $2.05 per million British thermal units (MMBtu) in 2020.
The spot price hit record lows in the first half of 2020 due to mild winter early in the year and depressed demand later on with the pandemic. The average monthly Henry Hub spot price in the first six months of 2020 was $1.81/MMBtu. Monthly prices reached as low as $1.63 per MMBtu in June, the lowest monthly inflation-adjusted price since at least 1989, according to EIA estimates. The monthly average Henry Hub price was less than $2/MMBtu in each month from February through June. Before 2020, the Henry Hub price had averaged less than $2/MMBtu in just one month—March 2016, the EIA said last summer.
At the start of 2021, natural gas prices jumped by 3.5 percent on Monday due to expectations of colder weather and projected higher demand for heating.
Gas demand for the week January 6 through 12 is expected to be low, according to NatGasWeather, with demand seen rising over the weekend, but lighter again around the middle of next week as much of the US warms back above normal.
The U.S. benchmark prices, however, are much lower than the price of liquefied natural gas (LNG) in Asia, which has recently jumped to a six-year high. The high LNG prices are expected to incentivize increased U.S. exports of LNG in the coming weeks and months.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
This is obviously even more true of propane, diesel fuel, obviously oil itself and even gasoline.