Fuel prices, weather to boost winter heat spending: EIA

US consumers will likely spend more on heating this winter as fuel prices and demand were expected to exceed recent winter seasons, the US Energy Information Administration (EIA) said in its Winter Fuels Outlook today.

The EIA expected residential natural gas prices for the 2022-23 winter demand season — spanning October 2022 through March 2023 — to be 22pc higher than the previous winter, with residential electricity prices estimated 6pc higher for the same period.

Dailies for the Henry Hub in Louisiana, the US gas benchmark, have averaged $6.19/mmBtu so far this month, 12pc higher than the average for October 2021 and more than double the average for October 2020. Prices for the Henry Hub for the 2022-23 winter block were $6.75/mmBtu yesterday, according to Argus forward curves data.

The EIA expected natural gas spending for a typical US household to be $931 this winter in its base-case scenario, an increase of 28pc from the 2021-22 winter season. A winter 10pc colder than last year would increase that spending average to $1,096. Estimated expenditures varied significantly across US regions and fuels, the EIA noted.

Average consumption for gas in a typical residential household during the upcoming winter was estimated to total 58mn cf (1.6mn m³), or 5pc higher than the previous winter season. Approximately 46pc of US households are primarily heated with natural gas according to the EIA.

Temperatures for the upcoming winter in most of the US were forecast "slightly colder" than the average for the last winter as well as the previous 10 winters, according to data from the US National Oceanic and Atmospheric Administration. Weather demand is a key input for energy consumption.

Though the EIA noted spot gas prices and demand were both expected to be higher this winter compared with last winter, draws in gas inventories were expected to be below the five-year average, with growth in gas production offsetting the increases. Production was expected to increase by 2.8 Bcf/d this winter, or 3pc higher than the same time last year. Total gas inventories were expected to exit the 2022-23 winter demand season at 1.5 Tcf, or 7pc below the five-year average.

By David Haydon