Natural Gas Prices Projected to Rise with Increased Demand | Blog

Natural Gas Prices Projected to Rise with Increased Demand

After hitting the lowest point in nearly 20 years, natural gas prices are expected to climb again. 

That's according to the January 2017 Short-Term Energy Outlook produced by the U.S. Energy Information Administration (EIA). The EIA projects that the Henry Hub natural gas spot price will average $3.55 per million British thermal units (MMBtu) in 2017 and $3.73/MMBtu in 2018, both of which are increases over last year's average of $2.51/MMBtu.

The chart below highlights the EIA's forecast and New York Mercantile Exchange (NYMEX) confidence intervals, which is a market-derived range that reflects trading in NYMEX futures markets. 

EIA 2017 Natural Gas Prices

Source: U.S. Energy Information Administration

The higher prices largely reflect an expected increase in natural gas consumption with a return to typical winter temperatures and a further increase in natural gas-fired power generation. Additionally, liquefied natural gas (LNG) exports are also projected to grow as more capacity comes online at the Cheniere Sabine Pass terminal in Louisiana in 2017 and then other facilities in 2018. 


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The projected price increase follows a year in which natural gas prices reached the lowest level since 1999. 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, significantly driving down demand across the residential and commercial sectors.

Looking for additional insights into natural gas and electricity prices? We track the latest energy market trends and report them out on a regular basis. Here’s our most recent Energy Market Update video. 

 

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