If 2022 ended like a lion, 2023 is starting out like a lamb, as natural gas prices have fallen 48 percent since mid-December due to warmer-than-normal temperatures. The U.S. could be on track to hit record-low demand in January if temperatures remain higher than normal.  

Volatile End to 2022

According to the EIA’s weekly report on December 22, 2022, the U.S. saw a 15.5 percent increase in demand due to below-normal temperatures from Winter Storm Elliott. With over 110 million people under windchill alerts, natural gas consumption for residential and commercial entities increased 36 percent compared to the previous year.  

The extreme temperatures during Winter Storm Elliott created volatility in regional spot prices. Pipelines like Colorado Interstate Gas, Northern Natural Gas Ventura, and Southern Star were trading above $30 per million British thermal units (MMBtu), with some hitting $50 per MMBtu. Extreme weather events like Winter Storm Elliott and Uri continue to highlight the vulnerabilities of mother nature’s impact on the natural gas market and infrastructure.  

Production Remains Steady

Production continues to remain steady, with the natural gas rig count at 154, which is a 48.1 percent increase from 2021. Overall natural gas production increased nearly five percent compared to last year at 105.8 billion cubic feet (Bcf) per day.  

According to the EIA’s report, working gas in underground storage ended the year at 6.7 percent under the five-year average with 2,891 Bcf in storage.  

Looking Forward in 2023

Although prices have receded this month, many of the same challenges the U.S. natural gas market faced in 2022 remain the war in Ukraine, growth in LNG exports, extreme weather events, etc... If you would like to take steps now to protect yourself from the unexpected, please reach out to your sales representative to learn more about the options available to you from WoodRiver Energy.