In a nod to the steep decline in natural gas prices following mild weather this winter, the Energy Information Administration (EIA) is slashing its 2023 Henry Hub forecast, with the agency now modeling a 50% discount versus 2022 prices.

Natural Gas Prices

The “significantly warmer-than-normal” weather in January depressed space heating demand and padded storage inventories, EIA said in its latest Short-Term Energy Outlook (STEO), published this week.

The latest STEO modeled an average Henry Hub spot price of $3.40/MMBtu for 2023, reflecting a steep 30% decline versus agency projections only a month ago. Prices should remain below the $4 mark until December, researchers said.

What’s more, recent futures trading implies that, if anything, EIA’s forecast might be too optimistic. The March...