U.S. Natural Gas Futures Experienced a Significant Surge
U.S. natural gas futures experienced a significant surge of over 4%...reaching above $2.5/MMBtu, driven by seasonal demand and increased exports. However, U.S. natural gas prices are predicted to undergo a substantial drop of nearly 41% in 2023, marking the most significant decline since 2006. This decline follows a 10% gain in 2022, primarily due to surplus supply. Record-breaking domestic natural gas production in the U.S. has enabled utilities to accumulate reserves, which currently stand at 8.5% above the seasonal average. This surplus is attributed to increased production and milder winters, which have reduced heating demand, according to the EIA. Forecasts indicate a 4% decrease in heating degree days compared to the previous 10-year average, resulting in a 2% drop in space heating consumption compared to the five-year average. Looking ahead, prices are expected to rebound as demand increases, driven by new U.S. LNG export plants in the U.S., Canada, and Mexico.
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