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by In 2023, US gas futures experienced a significant drop of almost 40%, falling below $2.5/MMBtu. This decline followed a 10% increase in 2022. The main cause? An oversupply situation where production exceeded demand. The US reported record levels of natural gas production. As a result, utilities have been able to amass substantial reserves. Current data shows that these inventories are 8.5% higher than the usual seasonal average.
The Energy Information Administration (EIA) links these plentiful reserves to two key factors: the high rate of natural gas production and a winter that was warmer than average. This milder weather led to a noticeable reduction in the need for heating. Future predictions point to a 4% decrease in heating needs compared to the last decade’s average. This translates to a 2% fall in space heating use, compared to the average of the past five years.
Looking ahead, there’s an expectation that natural gas prices will bounce back. This optimism is based on the anticipated rise in demand, particularly from new LNG export plants in the US, Canada, and Mexico. Yet, potential delays in projects like Exxon Mobil and Qatar Energy’s LNG export plants in Texas, and Venture Global LNG’s facility in Louisiana, could alter the projections for 2024.
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