The US Energy Information Administration (EIA) has revised its projections for natural gas production and demand in its latest Short Term Energy Outlook released on Tuesday. 

According to the report, natural gas production in the US is expected to decrease more than previously estimated, dropping from a record 103.8 billion cubic feet per day (bcfd) in 2023 to 102.1 bcfd in 2024.

This decline is attributed to several producers reducing their drilling activities following a significant drop in gas prices earlier this year.

However, the EIA anticipates that the declining output will lead to higher gas prices in 2024, with the average Henry Hub spot gas price forecast to reach $2.46 per million British thermal units (Btu), a 13% increase from the previous forecast. The higher prices are expected to incentivize more drilling in gas-producing regions, leading to a rebound in output in 2025.

Despite the production decline, domestic gas consumption is projected to reach record levels, rising from 89.1 bcfd in 2022 to 89.4 bcfd in 2023 and further to 89.9 bcfd in 2025. The EIA’s report suggests that the natural gas market will experience a period of adjustment, with prices and production levels responding to the changing supply and demand dynamics.

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