‹ Analysis & Projections

Short-Term Energy Outlook

Release Date: August 9, 2016  |  Next Release Date: September 7, 2016  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Natural Gas

Working natural gas inventories were 3,288 billion cubic feet (Bcf) as of Friday, July 29, 6 Bcf lower than the previous week, marking the first draw during the June-August period since 2006. Injections during the refill season have fallen short of five-year average levels in most weeks because of the high use of natural gas for electricity generation and because of slight declines in production. However, warm weather last winter left inventories at record high levels going into the injection season, and even low injections this summer could lead to a record-high level of natural gas in storage as the winter season begins.

Natural Gas Consumption

EIA's forecast of U.S. total natural gas consumption averages 76.3 Bcf/d in 2016 and 77.2 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 4.8% in 2016, then declines by 1.7% in 2017, as rising natural gas prices contribute to increasing coal use for electricity generation. Forecast industrial sector consumption of natural gas increases by 2.5% in 2016 and by 1.1% in 2017, as new fertilizer and chemical projects come online.

Natural Gas Production and Trade

EIA's natural gas marketed production in May, the month of the most recent survey data, averaged 78.1 Bcf/d, which is down 2.0 Bcf/d from the record-high daily average production in February 2016. However, EIA expects production to increase in late 2016 and through 2017 in response to forecast price increases and increases in liquefied natural gas (LNG) exports. Forecast natural gas production rises by 0.6% in 2016 and by 2.9% in 2017.

Natural gas pipeline exports to Mexico have risen in 2016, and EIA expects growth to continue because of growing demand from Mexico's electric power sector and because of flat natural gas production in Mexico. Gross pipeline exports are expected to increase by 0.7 Bcf/d in 2016 and by 0.1 Bcf/d in 2017 to an average of 5.7 Bcf/d.

EIA projects that LNG gross exports will rise to an average of 0.5 Bcf/d in 2016, with the startup of Chenier's Sabine Pass LNG liquefaction plant in Louisiana, which sent out its first cargo in February 2016. EIA projects that gross LNG exports will average 1.3 Bcf/d in 2017, as Sabine Pass ramps up capacity.

With expected growth in gross exports, net imports of natural gas decline from 2.6 Bcf/d in 2015 to a small amount of net exports in 2017. The United States is expected to become a net exporter of natural gas during the second quarter of 2017.

Natural Gas Inventories

Natural gas inventories in March ended at 2,496 Bcf, the highest end-of-withdrawal-season level on record. As of July 29, natural gas inventories were at 3,288 Bcf. Even with lower-than-average storage injections, EIA forecasts natural gas inventories to be 4,042 Bcf at the end of October 2016, which would be a record high level for that time of year.

Natural Gas Prices

The Henry Hub natural gas spot price averaged $2.82/MMBtu in July, up 24 cents/MMBtu from the June average. Price increases reflected warmer-than-normal temperatures in July, which led to increased demand from the electric power sector. Despite the increase in spot prices, prices still remain low enough to support significant natural gas-fired generation. EIA expects natural gas prices to gradually rise throughout the forecast period. Forecast Henry Hub prices average $2.41/MMBtu in 2016 and $2.95/MMBtu in 2017.

Natural gas futures contracts for November 2016 delivery that were traded during the five-day period ending August 4 averaged $3.01/MMBtu. Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for November 2016 contracts at $2.12/MMBtu and $4.28/MMBtu, respectively. In early August 2015, the natural gas futures contracts for November 2015 delivery averaged $2.91/MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $2.08/MMBtu and $4.06/MMBtu.

U.S. Natural Gas Summary
  2014 2015 2016 2017
Prices (dollars per thousand cubic feet)
Henry Hub Spot 4.52 2.71 2.49 3.04
Residential Sector 10.94 10.36 9.96 10.66
Commercial Sector 8.87 7.88 7.34 8.11
Industrial Sector 5.55 3.92 3.54 4.12
Supply (billion cubic feet per day)
Marketed Production 74.89 78.77 79.28 81.55
Dry Gas Production 70.49 74.06 74.19 76.24
Pipeline Imports 7.22 7.20 7.21 6.75
LNG Imports 0.16 0.25 0.21 0.20
Consumption (billion cubic feet per day)
Residential Sector 13.94 12.65 12.11 12.64
Commercial Sector 9.50 8.79 8.55 8.99
Industrial Sector 20.89 20.54 21.06 21.29
Electric Power Sector 22.32 26.50 27.77 27.29
Total Consumption 73.14 75.25 76.34 77.23
Primary Assumptions (percent change from previous year)
Heating Degree Days 1.9 -10.2 -2.6 4.0
Cooling Degree Days -0.7 14.6 0.0 -5.3
Commercial Employment 2.1 2.5 2.2 1.4
Natural-gas-weighted Industrial Production -0.8 1.3 0.7 2.2

Interactive Data Viewers

Provides custom data views of historical and forecast data

STEO Custom Table Builder ›
Real Prices Viewer ›

In beta testing:

STEO Data browser ›

Related Articles    
Today In Energy Daily
Natural Gas Weekly Update Weekly
Peak Underground Working Storage Capacity Annual
2016 Summer Fuels Outlook Slideshow Apr-2016 PDF
2015-2016 Winter Fuels Outlook Slideshow Oct-2015 PDF
2015 Summer Fuels Outlook Slideshow Apr-2015 PDF
2014-2015 Winter Fuels Outlook Slideshow Oct-2014 PDF
Weather Sensitivity in Natural Gas Markets Oct-2014 PDF
2014 Outlook for Gulf of Mexico Hurricane-Related Production Outages Jun-2014 PDF
2014 Summer Fuels Outlook Slideshow Apr-2014 PDF
Energy-weighted industrial production indices Mar-2014 PDF
Constraints in New England likely to affect regional energy prices this winter Jan-2013 PDF
Change in STEO Regional and U.S. Degree Day Calculations Sep-2012 PDF
2012 Outlook for Hurricane-Related Production Outages in the Gulf of Mexico Jun-2012 PDF
Changes in Natural Gas Monthly Consumption Data Collection and the Short-Term Energy Outlook Dec-2010 PDF
Trends in U.S. Residential Natural Gas Consumption 23-Jun-2010 PDF
Probabilities of Possible Future Prices Apr-2010 PDF
Energy Price Volatility and Forecast Uncertainty Oct-2009 PDF
The Implications of Lower Natural Gas Prices for Electric Generators in the Southeast May-2009 PDF