Summer Natural Gas Prices to Hit 20-Year Low, Reflecting Milder Weather, Higher Production: EIA
Sport prices for natural gas are projected to average $2.37 per million British thermal units from June to August this year, the lowest summer average since 1998, according to a July 18 report from the U.S. Energy Information Administration. A relatively mild weather at the start of the summer led to lower than expected gas-fired power generation, causing inventory injections to surpass the previous five-year average rate, the agency said.
- Henry Hub natural gas prices will be 55 cents/MMBtu, about 19 percent lower than last summer’s average; spot prices at key trading hubs across the U.S. traded close to the Henry Hub basis.
- From April to June, cumulative net injections into underground storage fields have exceeded the five-year average by 41 percent.
- The price forecast also reflects EIA’s updated assessment of drilling activity and average well productivity, which are higher than previously assumed.
- As supply growth begins to moderate in late 2019 and in 2020, prices will likely rise, averaging $2.50/MMBtu in the second half of 2019 and $2.77/MMBtu in 2020.
- If summer temperatures are warmer than expected, power consumption, gas-fired electricity generation, and, ultimately, natural gas prices could be higher than forecast.