The outlook for NatGas is certainly improving. The current heatwave in the country will contribute to that outlook. With production declining and hot summer, if NatGas storage does not increase over the summer, the NatGas price could be much higher. A cold winter could definitely be a driver for higher prices
Natural gas Henry Hub spot prices rose in June and averaged $2.59 per million British thermal units (MMBtu) for the month — the highest monthly average since September – the Energy Information Administration reports.
The increase in prices comes as production has declined and as demand for natural gas to fuel electricity generation has increased, said EIA, reporting in its July Short-Term Energy Outlook (STEO).
The Henry Hub natural gas spot price averaged $2.59/MMBtu in June, up 67 cents/MMBtu from the average price in May. EIA expects natural gas prices to gradually rise throughout the forecast period, but remain lower than they were last summer.
Forecast Henry Hub natural gas prices average $2.36/MMBtu in 2016 and $2.95/MMBtu in 2017.
April’s marketed natural gas production was 78.8 billion cubic feet per day (Bcf/d), a 0.3 Bcf/d decline from March 2016, and in April 2015, according to the most recent EIA data.
EIA projects increases in the natural gas price will continue through 2016, and will contribute to a reversal in production declines in the second half of the year, Kallanish Energy learns.
The EIA/STEO forecast of U.S. total natural gas consumption averages 76.5 Bcf/d in 2016, and 77.7 Bcf/d in 2017, compared with 75.3 Bcf/d in 2015.
In 2016, increases in total natural gas consumption are mainly attributed to increases in electric power sector use. Forecast electric power sector use of natural gas increases by 4.9% in 2016, then declines by 1.4% in 2017, as rising natural gas prices contribute to increasing coal use for electricity generation.
Forecast industrial sector consumption of natural gas increases by 2.7% in 2016 and by 1.5% in 2017, as new fertilizer and chemical projects come online.
EIA’s estimated natural gas production in June averaged 79.1 Bcf/d, down almost 1 Bcf/d from the record-high daily average production in February.
Production will rise by 1% in 2016, and 2.4% in 2017, in response to forecast price increases and increases in liquefied natural gas (LNG) exports, EIA/STEO reports.