U.S. natural gas prices have had a remarkably soft winter so far, but the whole of 2022 tells a completely different story.


In 2022, the wholesale U.S. natural gas spot price at Henry Hub averaged $6.45/MMBtu, the highest level since 2008, according to the Energy Information Administration (EIA) based on data from Refinitiv Eikon.

This was up 53% from 2021, the fourth-largest year/year increase in natural gas prices on record, behind only 2000, 2003 and 2021. Volatility was also off the charts. On a daily basis, the Henry Hub spot natural gas price ranged from $3.46 to $9.85/MMBtu, EIA said.

Prices varied from quarter to quarter, with Covid-related issues and then Russia’s invasion of Ukraine heavily influencing pricing.

During the first quarter of 2022, declining U.S. natural gas production due to freeze-offs in January and February and high net withdrawals of natural gas from storage caused the natural gas price to increase.

Then came Russia’s invasion of Ukraine. Continued high demand for U.S. LNG exports in Europe and weather-driven demand for natural gas in the United States led to Henry Hub price ranges in February and March of between $4.03/MMBtu and $6.70/MMBtu. Despite these price fluctuations, the $4.67/MMBtu average spot price was lower in the first quarter of 2022 than during the rest of the year, EIA said.

Driven by power sector demand, the Henry Hub spot price increased above $9.00/MMBtu in early June, before it fell by 40% by July 4 because of the shutdown of the 2.6 Bcf/d Freeport liquefied natural gas export terminal.

Henry Hub began to rise again in July and peaked on August 22, 2022, at $9.85/MMBtu amid soaring prices in Europe. This was 60% higher than the daily Henry Hub natural gas spot price at the beginning of the year, EIA said.

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Natural gas prices decreased late in the third quarter because of rising production and above-average storage injections in September. An injection of 111 Bcf natural gas into storage for the week ended Oct. 14 marked the fifth consecutive triple-digit increase and continued a rare autumn trend of narrowing deficits to historic averages.

By November, working natural gas in underground storage was close to the previous five-year average. The Henry Hub natural gas spot price reached an annual low of $3.46/MMBtu on November 9, down 65% from August 22, according to EIA.

Regional Differences

Capacity constraints affected natural gas prices throughout the year on a regional level. Prices at key Appalachian trading hubs continued to remain at a $0.68/MMBtu average discount to Henry Hub, according to NGI data. This was due to limited pipeline takeaway capacity in the region.

The spot price at the Waha Hub in West Texas averaged $1.26/MMBtu below Henry Hub in 2022, largely due to limited pipeline takeaway capacity in the region and to periods of pipeline maintenance that decreased takeaway capacity.

The Permian Basin, which feeds the Waha trading hub, is the second largest gas producing region in the United States after Appalachia and is growing. East Daily Capital is forecasting 4.6 Bcf/d of U.S. gas supply growth by the end of 2023, led by associated gas out of the Permian Basin.

Natural gas production in the Permian Basin more than doubled in the past five years and reached a high of 16.7 Bcf/d in 2021, according to the EIA. Additional pipeline projects out of the Permian Basin have been announced that would expand pipeline takeaway capacity by about 4.2 Bcf/d by the end of 2024.

Meanwhile, several pricing hubs in the western United States averaged over $48/MMBtu above Henry Hub on December 21 due to colder-than-normal temperatures and regional pipeline constraints.