The U.S. Energy Information Administration (EIA) has cut the U.S. natural gas price projection for this year as a result of warmer-than-expected climate at the beginning of 2023.
Warmer weather and decline in gas demand
A warmer-than-average start to the year has decreased natural gas consumption to below average, according to the EIA’s February Short-Term Energy Outlook (STEO). As a result, natural gas prices at the Henry Hub are predicted to average around $3.40 per million British thermal units in 2023, 47% less than in 2022.
The milder weather in January caused a smaller decline in U.S. natural gas stockpiles than we had anticipated, according to EIA Administrator Joe DeCarolis. We lowered our prediction for natural gas prices for the upcoming year due to the increased natural gas inventory.
“There is still a lot of uncertainty, including the possibility of extreme weather later this winter that could increase demand and temporarily slow down production, but those possibilities decrease as we approach spring.”
Projected level of U.S. reserves
According to the Energy Information Administration, the U.S. natural gas stockpiles have climbed following a period of below-average levels due to increasing natural gas production and decreased demand. As a result, the EIA anticipates that through the summer, natural gas stockpiles will stay above average.
As a result, stockpiles are expected to be 16% higher than the five-year average when the withdrawal season ends in March, at more than 1.8 trillion cubic feet.
“We expect about 4 percent less energy-related carbon dioxide emissions in 2023, which is driven largely by a 15 per cent decrease in emissions from coal this year,” added DeCarolis.
Thus, the EIA anticipates a 2% drop in U.S. power production in 2023, with even greater declines in coal-fired generation. The decline in electricity production is mostly due to lower consumption in the residential and industrial sectors.
Forecasted energy consumption
The Energy Information Administration also forecasts that U.S. coal exports will rise by about 2% in 2023 and by about 9% in 2024, largely to meet the rising demand in Europe and Asia. This is because Europe has been using more coal for electricity generation while the region seeks to reduce its consumption of Russian natural gas.
“Even as global demand for coal is growing, we expect that reduced U.S. demand will lead to less coal production in the United States this year and in 2024,” noted DeCarolis.
The STEO forecasts from the EIA continue to be questionable because of Russia and China. The EU’s restriction on importing Russian crude oil by sea has mainly had no impact on Russia’s crude oil exports, despite an increase in the worldwide demand for jet fuel as China’s economy has opened up following epidemic lockdowns.
Oil production and contributing factors
Furthermore, according to EIA, growth in China and other non-OECD nations will be the main drivers of a rise in global liquid petroleum consumption of 1.1 million barrels per day (b/d) in 2023 and 1.8 million b/d in 2024. In contrast, it is predicted that Russia’s oil production will fall by 1.1 million b/d from 2022 to an average of 9.9 million b/d in 2023.
Because crude oil liftings data indicate that Russia’s exports have remained higher than anticipated in the wake of the EU’s ban on seaborne imports of Russian crude oil, which went into effect on December 5, the EIA’s forecast for Russia’s 2023 production is 0.4 million b/d higher than in the January STEO.
The EU’s ban on seaborne petroleum products from Russia, which went into effect on February 5, will cause Russian refineries to reduce the amount of crude oil they import, which will disrupt crude oil production, according to the Energy Information Administration, which still expects Russia’s oil production to decline in the coming months.
“We continue to monitor developments in Russia and China because of their impact on the global energy sector,” said DeCarolis.
In a recent report, the EIA stated that proven U.S. oil reserves increased but did not nearly reach pre-pandemic levels in 2021, while proven U.S. natural gas reserves reported by operators set a new record in the country.
Please continue to read new articles here about merchandise assessed by Waytrade.