Commodities Buzz: EIA Says Natural Gas Prices Seen Supported On Cold Temperatures In US

9 Feb 2022 , 12:08 PM

The US EIA stated in its Short Term Energy Outlook (STEO) that in January, the natural gas spot price at Henry Hub averaged $4.38 per million British thermal units (MMBtu), up from the December average of $3.76/MMBtu. Higher prices in January were a result of colder-than-normal weather in parts of the country, particularly the Northeast and the Midwest where demand increased for natural gas used for space heating and for power generation. The STEO uses weather forecasts from the National Oceanic and Atmospheric Administration (NOAA), and NOAA published the forecast we used in this STEO in late January. Temperatures have continued to be cold in parts of the country in early February, which will contribute to Henry Hub prices averaging $4.70/MMBtu for the month. The winter weather forecasts are highly variable and create a significant amount of uncertainty in price forecast. In addition, global demand for US liquefied natural gas (LNG) has remained high, limiting some of the downward pressure on natural gas prices. The natural gas prices could remain volatile over the coming months, and the way that temperatures affect natural gas demand in February and March will be a key driver of how inventories end the withdrawal season, which will be important for natural gas price formation in the coming months.

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