The natural gas price forecast for the United States indicates a decline in residential natural gas prices to their lowest level since 1977, with inflation-adjusted prices dropping to $12.75 per Mcf in 2024 and $12.00 per Mcf in 2025, representing a decline of 17% and 22%, respectively, from 2023 prices1. This decline is driven by increasing natural gas production and supplies outpacing demand, leading to lower wholesale commodity prices for natural gas.
- Production and Consumption Trends:
- Natural gas production is expected to fall by 2% from 1Q24 to 2Q24 and be 1% less in 2024 than last year before increasing by 2% in 2025 to a record of almost 105 Bcf/d2.
- Natural gas consumption is forecast to be mostly unchanged in 2024, averaging 89 Bcf/d, with small increases in the residential, commercial, and electric power sectors offset by a slight decline in the industrial sector2.
- Electricity Generation and Natural Gas:
- The growth in U.S. electricity generation is expected to be 3% in 2024, with solar generation contributing 60% of that increase3.
- Natural gas consumption for electricity generation is forecast to remain about the same as the previous year, with a peak of about 41 Bcf/d in the summer of 20252.
- Market Dynamics and Price Forecasts:
- The Henry Hub natural gas spot price is expected to average around $2.90 per MMBtu in 20242.
- The narrowing gap between natural gas and petroleum prices is anticipated to keep more hydrocarbon gas liquids in the natural gas stream, potentially impacting prices2.
- Inflation and Real Prices:
- The real price of residential natural gas is projected to decline significantly, reflecting the changing purchasing power of money and the impact of lower nominal prices adjusted for inflation1.
The natural gas price forecast suggests a period of lower prices, driven by market dynamics and increasing production, which could have implications for consumers and industry participants.
7/14/2024 08:46pm
