Warm weather and the pullback in economic activity caused by the COVID pandemic drove 2020 natural gas prices at the benchmark Henry Hub to their lowest level in 25 years, according to data from S&P Global Platts and the U.S. Energy Information Administration.

"Prices started the year relatively low because mild winter weather led to less natural gas demand for space heating," the EIA said Jan. 7. "Prices remained low as economic effects induced by the COVID-19 pandemic reduced both natural gas production and consumption."

The average daily spot price at Henry Hub in 2020 was $1.9988/MMBtu, according to Platts data, the lowest annual average since 1995's $1.708/MMBtu, according to Platts.

In 2020, prices dropped steadily into the summer as LNG export demand dried up and warm spring reduced heating demand, the EIA said. LNG demand picked up in the second half of the year, bolstering prices, according to the federal data agency.

Although gas producers cut production — reversing a three-year trend of increasing volumes, according to the EIA — the 2.2 Bcf/d drop in average production volumes year-over-year was not enough to offset the drop in demand.

Consumption of gas for heating declined in 2020, but consumption of gas for power increased 2% as low prices encouraged power producers to use gas over coal, the EIA said. The combination of low summer prices and high summer temperatures had gas demand for power reaching record highs in July 2020, the EIA said, citing Platts.

S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global.