Natural Gas Summary from the Short-Term
Energy Outlook |
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Natural
Gas Summary from the Short-Term Energy Outlook: The Energy Information Administration (EIA) projects that natural gas
wellhead prices will average $4.41 per MMBtu in December 2003, although spot
prices are expected to average $5.38 (Short-Term Energy
Outlook, December 2003). The
average wellhead price is expected to increase moderately to $4.56 during the
first three months of 2004. Natural
gas prices were lower in November than previously expected but forward
price expectations remain sensitive to weather conditions. Prices increased rapidly in futures
trading in early December as some cold weather moved into the Eastern United
States and reported withdrawals from gas storage were slightly larger than
expected. Spot prices above $5 per
MMBtu remain likely over the next few months if normal (or colder) weather
prevails, especially with oil prices remaining at relatively high
levels. Natural gas storage levels
are still above average and hold the potential to push prices back down if warm
temperatures and weak heating demand materialize later in the winter, just as
upward spikes remain a strong possibility if the weather turns cold. Natural gas demand is expected to show a decline
of 2.3 percent in 2003 largely owing to high prices discouraging demand in
the industrial and electric power sectors.
However, expected growth in the economy, along with somewhat lower
projected annual average prices, are expected to increase demand by nearly 1
percent in 2004. Natural gas
production is expected to increase by about 2.4 percent this year, but to
fall back somewhat in 2004 as drilling intensity declines. In 2004, the projected supply gap between
demand and production is offset by the expectation that storage injection
requirements will be less than those of 2003, when stocks after the winter of
2002-2003 were at record lows.
Source: Energy Information Administration, Short-Term
Energy Outlook, December 2003. Need Help? |
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Energy Information Administration, EI 30 |
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