Just as temperatures dipped and the brisk winds brought a chill to Oklahoma this week, the government predicted natural gas prices are likely to be about 40% higher for the rest of the winter heating season.
The U.S. Energy Information Administration expects the average price of natural gas for the remainder of the winter heating season to be about 40% higher than the November spot price, despite expectations that U.S. natural gas inventories will remain higher than average throughout the winter. Although the price increase is notable, recent U.S. natural gas prices have been at near or record lows, and the increase will keep prices in line with previous end-of-winter prices.
The United States started the winter season with 6% more natural gas in storage than average, and EIA forecasts in its December Short-Term Energy Outlook (STEO) that natural gas inventories will remain 2% above the five-year average at the end winter.
“Recent natural gas prices have been historically low, so a colder winter than last will draw on storage and raise prices to some extent,” said EIA Administrator Joe DeCarolis. “We expect natural gas prices will remain well below the high prices we saw in 2021 and 2022.”
EIA expects U.S. benchmark Henry Hub natural gas spot price to increase from just above $2.00 per million British thermal units (MMBtu) in November to an average of about $3.00/MMBtu for the rest of the winter heating season.
Other highlights from the December STEO include:
- Oil production: EIA expects the extension of OPEC+ oil production cuts announced on December 5 to cause global oil inventories to decrease by about 700,000 barrels per day in the first quarter of 2025. After the first quarter, additional OPEC+ production and continued supply growth outside of OPEC+ should reverse the trend of decreasing inventory, and EIA expects inventory to grow by about 100,000 barrels per day over the remainder of the year.
- Oil prices: EIA expects that inventory builds will put some downward pressure on crude oil prices in the second half of 2025; EIA expects the Brent crude oil spot price to fall from an average $74 per barrel in the first quarter of 2025 to an average $72 per barrel in the fourth quarter.
- Future Short-Term Energy Outlooks: The January STEO will be the first month that extends forecasts through 2026.
The full December 2024 Short-Term Energy Outlook is available on the EIA website.
