The US Energy Information Administration (EIA) expects higher-than-average natural gas prices globally as demand remains high this winter in the United States, Europe, and Asia, and inventories remain low.

According to EIA’s September 2022 Short-Term Energy Outlook (STEO), the US natural gas spot price at the Henry Hub will continue to climb this winter, reaching a monthly average of $9.10 per million British thermal units in January 2023. That price will be the highest inflation-adjusted monthly average price since 2008.

Natural gas futures prices in Europe and Asia set records in August as pipeline exports from Russia to Europe reached their lowest level in 40 years and US liquefied natural gas (LNG) exports remained limited due to the outage at the Freeport LNG facility.

EIA expects demand for natural gas to remain high despite high prices for the commodity.

There are limited options for replacing natural gas in the short term, especially for electricity generation. We expect electricity producers—particularly in Europe—will have to generate some electricity from oil-based fuels this winter.

—EIA Administrator Joe DeCarolis

As the United States approaches winter, EIA forecasts US natural gas inventories will be 7% below their previous five-year average at the end of October. Natural gas is the primary source of heat for 46% of US households.

EIA continues to forecast a decrease in average US natural gas prices in 2023, as production increases.

Other key takeaways from the September 2022 STEO forecast include:

• EIA forecasts US LNG exports will average 11.7 billion cubic feet per day during the fourth quarter of 2022—up 17% from the third quarter.

• EIA expects that oil prices will remain somewhat the same for the rest of the year, although with continued price volatility.

• EIA estimates that US households consumed 1.7% more electricity this summer (June–August) than during the summer of 2021. This increase is largely because estimates show the summer of 2022 was slightly hotter than 2021.