Henry Hub natural gas spot prices have trended downward since August, but that won’t translate into lower retail prices because this winter will be colder than usual, according to the Energy Information Administration.
Higher-than-expected storage levels heading into winter are contributing to EIA’s forecast of slightly lower natural gas spot prices at Henry Hub, according to its November Short-Term Energy Outlook. During the winter heating months (November-March), spot prices will average about $6 per million British thermal units (MMBtu), which is about $1/MMBtu less than October’s forecast and much lower than the August peak of $8.80/MMBtu.
Still, “we expect natural gas prices to rise this winter as a result of seasonal demand for natural gas in space heating, which typically peaks in January and February,” the Nov. 8 report said.
And while the November Henry Hub forecast is much lower than the August peak, it’s still “the highest real price since 2009-2010,” according to EIA’s Nov. 9 Today in Energy.
EIA expects Henry Hub spot prices to fall after January as storage deficits shrink, according to the Short-Term Energy Outlook.
A 2% drop in electricity demand in 2023 means that renewable energy sources will make up a greater share of generation, from 22% in 2022 to 24% next year, according to EIA projections. The share of generation from natural gas is expected to drop from 38% in 2022 to 36% in 2023, the report said.
And just in time for the holiday season, drivers can expect to pay a bit less to fill their cars. The average price for a gallon of regular gasoline rose to $3.82 in October after falling for three consecutive months, but EIA expects prices to fall again in November as “refiners increase production to meet distillate demand and gasoline inventories begin increasing.”
EIA expects the average retail price to fall to $3.60 per gallon in February 2023. “Following this decrease, we expect U.S. retail gasoline prices to remain relatively flat for the rest of 2023,” the report said.