What is the outlook for the natural gas spot price in 2024 and 2025? – United States. Energy Information Administration (EIA)

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What is the outlook for the natural gas spot price in 2024 and 2025? – United States. Energy Information Administration (EIA)



In-depth analysis

February 12, 2024

We expect the United States. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per million British thermal units (MMBtu), in our February Short-Term Energy Outlook (STEO). We forecast increases in natural gas prices as demand for natural gas grows faster than supply in 2024.

monthly Henry Hub natural gas price


In 2022 and 2023, increases in natural gas supply (domestic natural gas production and imports) exceeded the increases in natural gas demand (domestic consumption and exports). In 2024, we expect the reverse will be true: demand increases by 2.3 billion cubic feet per day (Bcf/d) in our forecast, and supply remains relatively flat. In 2025, we expect supply and demand to grow at similar rates, although inventories will build because supply will still slightly exceed demand in our forecast.

At the end of January 2024, 7% more natural gas was held in United States. inventories than the five-year (2019–23) average for that time of year. We expect natural gas inventories to remain high relative to their previous five-year average throughout 2024 and 2025.

United States. natural gas inventory, supply, and demand


We forecast that most of our increase in United States. natural gas supply will come from domestic production of associated natural gas, much of which is in the Permian region of western Texas and eastern New Mexico. As a result, if United States. crude oil production is less than we expect, we will also see less natural gas production than we forecast. In late 2023, we described in a STEO Perspectives paper how different crude oil prices might affect crude oil and natural gas production in our short-term forecast.

forecast annual change in United States. natural gas supply and demand


Growth in natural gas demand is driven by domestic consumption in 2024, then exports in 2025

We expect natural gas consumption to grow in all sectors in 2024 except the industrial sector, where we expect consumption will decrease slightly. Sectoral changes in natural gas consumption depend mostly on the weather. Natural gas-fired power plants provide about 40% of United States. electricity generation annually, so electricity demand from heating and air-conditioning equipment influences how much natural gas the electric power sector consumes. We expect about 11% more United States. natural gas consumption for electricity in 2024 than the previous five-year average.

In the residential and commercial sectors, colder temperatures in the winter also affect direct natural gas consumption by heating equipment. We expect combined consumption in the residential and commercial sectors to be 5% higher in 2024 than in 2023 because January 2023 and December 2023 had warmer-than-average temperatures, leading to relatively low consumption of natural gas for space heating. Our assumptions for future weather largely reflect the trend of the past 30 years.

The mix of energy sources and technologies used to generate electricity also affects natural gas consumption in the electric power sector. As developers add more generating capacity from solar- and wind-powered generators, those generators’ incremental generation may reduce the need to dispatch natural gas-fired power plants. Changes in the timing and magnitude of new solar and wind capacity might also affect our forecast for natural gas consumption in the electric power sector.

United States. natural gas consumption by sector


United States. natural gas exports depend on the timing of new LNG export terminals

The United States exported 20.8 Bcf/d of natural gas in 2023, 57% as liquefied natural gas (LNG). At the end of 2023, 11.4 Bcf/d of baseload nameplate LNG export capacity had been built in the United States, and we expect developers to add an additional 5.3 Bcf/d of new LNG export capacity by the end of 2025.

According to trade press reports and other sources, three new terminals will come on line in the second half of 2024 and in 2025. Any changes to the operational dates of the three new export terminals—Golden Pass and Corpus Christi Stage III in Texas and Plaquemines LNG in Louisiana—may notably affect our LNG export forecast and, in turn, our overall natural gas demand expectations.

Our forecast accounts for the recent United States. Department of Energy (DOE) announcement to pause determinations on applications to export LNG to countries with which the United States does not have a free trade agreement. However, capacity additions through 2025 will not be affected because these projects have been fully authorized by DOE and are already under construction.

Natural gas prices at several price hubs in Europe and Asia remain relatively high over the forecast period compared with United States. natural gas prices. We assume that United States. LNG over the forecast period will continue to replace natural gas that had been exported from Russia by pipeline to Europe. Because global LNG liquefaction capacity additions will be limited in the next two years, demand for flexible LNG supplies, mainly from the United States, will increase to meet incremental growth in global demand.

Principal contributor: Corrina Ricker
Data visualization: Corrina Ricker, Owen Comstock





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