Some of the warmest weather on record in the US for January and February this year will hammer US natural gas demand in the first quarter, the US Energy Information Administration (EIA) said March 7 in its March Short-Term Energy Outlook (STEO).
Natural gas consumption is expected to average just 99.1bn ft3/day in Q1 this year, the EIA forecasts, down 5% from Q1 2021. The largest declines will be seen in the residential and commercial sectors, where warm weather will cut demand by about 11% from the first quarter last year.
“A lot less natural gas was consumed in the US residential and commercial sectors than we generally expect in January and February,” EIA Administrator Joe DeCarolis said. “The warmer weather in most of the country means homes and business haven’t been running their heating systems as much as they normally do during those months.”
Along with reduced demand comes lower prices, the EIA said, forecasting that the Henry Hub spot price will average just $3/mn Btu this year, down more than 50% from 2022. As recently as January, the EIA was forecasting Henry Hub this year at $5/mn Btu.