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EIA: Natural Gas Prices Fell To Lowest Point Since 1999

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In 2016, natural gas prices hit the lowest point in nearly 20 years. 

That's according to the latest natural gas intelligence provided by the U.S. Energy Information Administration (EIA). EIA's reporting finds that 2016 natural gas spot prices averaged $2.49 per million British thermal units (MMBtu) at the national benchmark Henry Hub in Louisiana, which is the lowest annual average price since 1999.

The chart below highlights the monthly and annual average natural gas spot prices at the Henry Hub. 

Source: U.S. Energy Information Administration

What were the main drivers of low natural gas prices in 2016? According to the EIA, mainly mild weather and shifting natural gas demand. 

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Mild Weather

Warmer winter weather reduces demand for heating fuels such as natural gas, heating oil and electricity. In the first six months of 2016, the U.S. experienced the fewest heating degree days (one indicator of heating demand) since at least 1949, the first year that the EIA has complete monthly data. In 2016, annual natural gas consumption for the residential and commercial sectors declined 7 percent and 4 percent respectively. 

Shifting Natural Gas Demand

While natural gas consumption was lower in the residential and commercial sectors on an annual basis, natural gas demand increased across all sectors later in the year. For the first time ever, U.S. natural gas-fired generation surpassed coal generation, supplying about 34 percent of the nation’s electricity, compared to coal's 30 percent. Additionally, in November 2016, the United States became a net exporter of natural gas on a monthly basis for the first time since 1957. 

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Posted: January 13, 2017