The natural gas price at the U.S. benchmark Henry Hub declined by 41%, or $2.26 per million British thermal units (MMBtu), in January 2023 compared with December 2022, based on data from Refinitiv Eikon. The price decline was driven by warmer-than-average temperatures across the United States that reduced natural gas consumption for space heating and by increased natural gas production. In our February Short-Term Energy Outlook (STEO), we forecast the natural gas price at the Henry Hub will average $3.40/MMBtu in 2023.

Typically, U.S. natural gas prices increase in the winter as temperatures decrease and demand for space heating increases. This past January was the warmest January since 2006. The United States was warmer than normal; it experienced 16% fewer heating degree days (HDDs, a measure of how cold it is) than the 10-year (2013–22) average. As a result, we estimate that in January, natural gas consumption in the residential and commercial sectors, combined, was 15% lower (at 40.1 billion cubic feet per day [Bcf/d]) than the five-year (2018–22) average for the month. In addition, an outage at the Freeport LNG liquefied natural gas export facility has resulted in approximately 2.0 Bcf/d less feedgas demand since June 2022. The decreased demand for natural gas contributed to a lower January price.

We estimate that dry natural gas production in January averaged 11% more (at 100.2 Bcf/d) than the five-year average and was up 5% from last January. Strong production combined with less consumption in January reduced natural gas withdrawals from storage by 55%, or 371 Bcf, compared with the five-year average. Natural gas in underground storage in the Lower 48 states as of January 27, 2023, was 7% higher (at 2,583 Bcf) than the five-year average.