U.S. natural gas production in 2023 forecast to hit record high

Refinery and storage tanks are photographed across the Buffalo Bayou in La Porte, Texas, the United States, on June 26, 2019. (Xinhua/Yi-Chin Lee)

The Henry Hub natural gas spot price will average 3.40 U.S. dollars per million British thermal units (MMBtu) in 2023, down almost 50 percent from last year, the report forecast.

HOUSTON, Feb. 7 (Xinhua) -- U.S. natural gas production will hit a record high in 2023, though demand will fall, the U.S. Energy Information Administration (EIA) projected on Tuesday.

In its February Short-Term Energy Outlook report, the agency forecast that dry gas production will rise to 100.27 billion cubic feet per day (bcfd) this year and 101.68 bcfd in 2024 from a record 98.09 bcfd in 2022.

U.S. natural gas production growth has been outpacing demand growth the past several months, helping reduce natural gas prices, the report noted.

The Henry Hub natural gas spot price will average 3.40 U.S. dollars per million British thermal units (MMBtu) in 2023, down almost 50 percent from last year, the report forecast, calling it a result of "significantly warmer-than-normal weather" in January that led to less-than-normal consumption of natural gas for space heating and pushed inventories above the five-year average.

Temperatures across the United States in January were the mildest since 2006, according to the report.

Natural gas prices remain very volatile, said the report. "Extreme weather events and production freeze-offs could still potentially cause price spikes at both the Henry Hub and in regional markets, but that potential diminishes as spring approaches, particularly now that inventories have moved back above the five-year (2018-2022) average."

The EIA now expects U.S. natural gas inventories will close the withdrawal season at the end of March at more than 1.8 trillion cubic feet, 16 percent more than the five-year average.

In the EIA forecast, U.S. LNG exports will rise once the Freeport facility is back online, and LNG exports will increase by 11 percent on an annual basis in 2023 compared with 2022.

Global liquid fuels consumption will increase by 1.1 million barrels per day (b/d) in 2023 and by 1.8 million b/d in 2024, driven primarily by growth in China and other non-OECD countries, the report projected.

Based on the S&P Global macroeconomic model, the U.S. real GDP will contract slightly in the first half of 2023, partly resulting from a decline in residential fixed investment, but is expected to pick up later this year and reaches an annual average of 2.1 percent in 2024, according to the report.