Natural gas prices fall to lowest since 2021 in major reversal post-Ukraine war
Jeremy Beaman
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Natural gas futures slumped to the lowest level in more than a year on Friday, marking a major turnaround since the massive run-up in prices that followed Russia’s invasion of Ukraine and threatened to impose hardship on households in New England and across the United States.
Futures fell below $3.60 per MMBtu Friday morning, lower than any closing price since the summer of 2021, before inching back up. NYMEX futures are trading at nearly a third of their summer 2022 peak near $10 per MMBtu.
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Gas prices rose precipitously in the wake of the war in Ukraine and saw continued volatility throughout last year. Dwindled storage levels also contributed to the price volatility throughout the year, according to analysts.
U.S. gas production was nonetheless strong in 2022 and reached records, according to the Energy Information Administration’s data. EIA estimates production in the month of January will rise in all producing regions.
“Production has remained very robust since the summer, even during the coldest days,” said Juan Alvarado, the senior director of energy analysis at the American Gas Association.
Milder temperatures have somewhat offset the high demand driven by recent winter storms, and storage levels remain strong, Alvarado said, adding that the combination helps explain what may be driving the lower prices.
Exports of liquefied natural gas also rose to new heights in 2022, especially to Europe, cementing the U.S. as the No. 1 exporter in the world.
Falling prices are good for industrial consumers, as well as residential power and gas customers, whose winter energy bills were forecast to rise considerably compared to last season.
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Particularly in New England, officials had warned that they might not have adequate supplies in extreme winter weather, and congressional delegations had lobbied the administration for policies to allow more supply into the Northeast. EIA’s winter outlook, which was published in October, forecast an average household heating with natural gas to pay some 28% more on fuel this winter.
The lower prices, meanwhile, have cut into industry earnings. ExxonMobil said lower prices in the fourth quarter reduced earnings by some $2.4 billion.