U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Short-Term Energy Outlook
Very cold temperatures in early January led to new record-high withdrawals of natural gas from storage in a season already characterized by larger-than-normal storage withdrawals. Several more days of brutal cold came in the following weeks of January with working natural gas storage withdrawals exceeding 200 billion cubic feet (Bcf) for three of the weeks during the month. For the second month in a row, the forecast end-of-March 2014 working inventory has been revised downward to reflect recent very high withdrawals. EIA now projects inventories will end this heating season at 1,331 Bcf, the lowest end-of-season level since 2008.
The natural gas February futures contract expired at $5.56/MMBtu, which was a four-year high. Pipeline constraints in the Northeast often lead to price increases during times of high winter demand. Last month, spot market prices in the Northeast were routinely in the double digits, with New York prices settling in the $90/MMBtu range on several days in January. The effect of spot market fluctuations on end-use prices depends on several factors. Utilities begin buying natural gas in the spring, and policies for price-setting vary by state. Additionally, per-unit prices are lower in the winter and during times of high consumption, as a utility's high fixed costs are distributed over larger volumes. Residential natural gas prices are expected to average $10.16 per thousand cubic feet (Mcf) this winter, an increase of $0.41/Mcf (4.2%) from last winter. Last winter, natural gas consumers spent an average of $603 on their heating bills. This season, consumers can expect to spend $649 on natural gas heating for the winter months, a 7.7% increase.
U.S. Natural Gas Consumption
EIA expects total natural gas consumption will average 70.2 Bcf/d in 2014. This represents an upward revision of 0.6 Bcf/d from last month's STEO and is largely attributable to an increase in January consumption. The projected year-over-year increases in natural gas prices contribute to declines in natural gas used for electric power generation from 24.9 Bcf/d in 2012 to 22.3 Bcf/d in 2013 and 22.0 Bcf/d in 2014. In 2015, total natural gas consumption increases by 0.8 Bcf/d with growth in use by the industrial and electric power sectors. EIA expects natural gas consumption in the power sector to increase to 22.6 Bcf/d in 2015 with the retirement of some coal plants.
U.S. Natural Gas Production and Trade
EIA expects natural gas marketed production will grow at an average rate of 2.2% in 2014 and 1.2% in 2015. Rapid Marcellus production growth is causing natural gas forward prices in the Northeast to fall even with or below Henry Hub prices outside of peak-demand winter months. Consequently, some drilling activity may move away from the Marcellus back to Gulf Coast plays such as the Haynesville and Barnett, where prices are closer to the Henry Hub spot price. EIA projects Gulf of Mexico production will increase by 1.7% in 2014 before falling 2.3% in 2015.
Liquefied natural gas (LNG) imports have declined over the past several years because higher prices in Europe and Asia are more attractive to sellers than the relatively low prices in the United States. Several companies are planning to build liquefaction capacity to export LNG from the United States. The first of the new facilities to liquefy gas produced in the Lower-48 states for export is expected to come online in the fourth quarter of 2015.
Growing domestic production over the past several years has replaced pipeline imports from Canada, while exports to Mexico have increased. EIA expects these trends will continue through 2015. EIA projects net imports of 3.5 Bcf/d in 2014 and 2.6 Bcf/d in 2015, which would be the lowest level since 1987. Over the longer term, the EIA Annual Energy Outlook 2014 projects the United States will be a net exporter of natural gas beginning in 2018.
U.S. Natural Gas Inventories
Natural gas working inventories fell by 262 Bcf to 1,923 Bcf during the week ending January 31, 2014. Colder-than-normal temperatures during the month resulted in increased heating demand, prompting larger-than-normal withdrawals, and a new record high monthly withdrawal (surpassing the previous record set in December 2013). Stocks are now 778 Bcf less than last year at this time and 556 Bcf less than the five-year (2009-13) average for this time of year.
U.S. Natural Gas Prices
Natural gas spot prices averaged $4.71/MMBtu at the Henry Hub in January, up $0.47/MMBtu from December, the result of bitterly cold weather during the month. EIA expects the price increases of the past few months will reverse at the end of winter. Projected Henry Hub natural gas prices average $4.17/MMBtu in 2014 and $4.11/MMBtu in 2015.
Natural gas futures prices for May 2014 delivery (for the five-day period ending February 6, 2014) averaged $4.48/MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for May 2014 contracts at $3.28/MMBtu and $6.13/MMBtu, respectively. At this time last year, the natural gas futures contract for May 2013 averaged $3.46/MMBtu and the corresponding lower and upper limits of the 95% confidence interval were $2.61/MMBtu and $4.58/MMBtu.
|U.S. Natural Gas Summary|
|2012||2013||2014 projected||2015 projected|
|Prices||(dollars per thousand cubic feet)|
|Henry Hub Spot||2.83||3.84||4.29||4.23|
|Supply||(billion cubic feet per day)|
|Dry Gas Production||65.73||66.55||67.87||68.67|
|Consumption||(billion cubic feet per day)|
|Electric Power Sector||24.89||22.31||22.01||22.63|
|Primary Assumptions||(percent change from previous year)|
|Heating Degree Days||-12.8||19.0||-4.0||-1.7|
|Cooling Degree Days||2.2||-12.2||3.7||0.3|
|Natural-gas-weighted Industrial Production||1.7||1.8||3.0||3.3|
Interactive Data Viewers
|Table WF01. Average Consumer Prices and Expenditures for Heating Fuels During the Winter|
|Table 1. U.S. Energy Markets Summary|
|Table 2. U.S. Energy Prices|
|Table 5a. U.S. Natural Gas Supply, Consumption, and Inventories|
|Table 5b. U.S. Regional Natural Gas Prices|
|Table 8. U.S. Renewable Energy Consumption|
|Table 9a. U.S. Macroeconomic Indicators and CO2 Emissions|
|Table 9b. U.S. Regional Macroeconomic Data|
|Table 9c. U.S. Regional Weather Data|
|Today In Energy||Daily|
|Natural Gas Weekly Update||Weekly|
|Peak Underground Working Storage Capacity||Annual|
|2013-2014 Winter Fuels Outlook Slideshow||Oct-2013|
|2013 Outlook for Gulf of Mexico Hurricane-Related Production Outages||Jun-2013|
|Constraints in New England likely to affect regional energy prices this winter||Jan-2013|
|Change in STEO Regional and U.S. Degree Day Calculations||Sep-2012|
|2012 Outlook for Hurricane-Related Production Outages in the Gulf of Mexico||Jun-2012|
|Changes in Natural Gas Monthly Consumption Data Collection and the Short-Term Energy Outlook||Dec-2010|
|Trends in U.S. Residential Natural Gas Consumption||23-Jun-2010|
|Probabilities of Possible Future Prices||Apr-2010|
|Energy Price Volatility and Forecast Uncertainty||Oct-2009|
|The Implications of Lower Natural Gas Prices for Electric Generators in the Southeast||May-2009|