Oil & Gas

U.S. gas prices hit an all-time low in November, reaching their lowest inflation-adjusted levels, according to a recent report from the Washington-based Energy Research Unit. The price of spot gas at Henry Hub dropped to $1.21 per million British thermal units (MMBtu) on November 8 and 11, marking the lowest prices ever recorded.

The four-day stretch in November saw the most significant decline, with several other days throughout the year showing similar drops. For the month, the average spot price at Henry Hub was $2.12 per MMBtu, the lowest for November on record, down from $2.20 in October.

Several factors contributed to this sharp decline in gas prices, as outlined in the Energy Information Administration (EIA) report released on December 12, 2024. First, the U.S. experienced a high supply of natural gas, with production remaining stable and gas inventories reaching 3.922 trillion cubic feet by the end of the 2024 injection season on October 31—the highest levels since 2016. Additionally, U.S. natural gas production is expected to average 113 billion cubic feet per day in 2024, maintaining the peak levels seen in 2023.

Mild autumn weather also played a role in reducing gas consumption, particularly for heating purposes. The lack of extreme cold temperatures meant that demand for gas was lower than usual, further pushing prices down. Alongside this, stable net gas exports and a lack of significant increases in liquefied natural gas (LNG) export capacity helped curb demand, contributing to the overall drop in prices.

Looking ahead, the EIA anticipates that U.S. gas prices will rise in early 2024. Gas prices spiked above $13 per MMBtu in January 2024 due to colder-than-normal temperatures, which increased heating demand. The EIA predicts an average rise of $3 per MMBtu over the next year, driven by two main factors: colder winter weather and growing domestic LNG export capacity. These elements are expected to increase demand, pushing gas prices higher in the coming months.