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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 $5.57 per MMBtu in January 2004 and $5.40 in February, and then decrease to $4.77 in March as the heating season winds down (Short-Term Energy Outlook, January 2004). Spot prices were quite variable in December, with prices at the Henry Hub starting the month at around $5.00 per MMBtu, spiking to roughly $7.00 in the middle of the month, then falling to $5.50 toward the end of the month as warmer-than-normal weather eased demand. Spot prices will likely remain well above $5.00 over the next few months if normal or colder weather prevails, especially with oil prices remaining at relatively high levels. (Oil prices this winter are expected to average $31.35 per barrel (19 cents higher than last winter’s average), or 5.41 per MMBtu.) Natural gas storage levels were 8 percent above average as of January 2, which could place downward pressure on prices if warm temperatures and weak heating demand occur later this winter, just as rising prices are possible if the weather becomes colder. Overall in 2004, natural gas wellhead prices are expected to average $4.73 per MMBtu, while spot prices will average nearly $5.00. In 2005, natural gas spot prices are projected to fall to an average of $4.83 per MMBtu under the assumption that domestic and imported supply can continue to grow by about 1-1.5 percent per year. Early estimates indicate that natural gas production increased by
about 2.0 percent in 2003. Natural gas production is expected to continue to
expand modestly through 2005, as natural gas well completions, which totaled
an estimated 20,000 in 2003, continue to grow to between 21,000 and 22,000
wells per year over the next 2 years. Natural gas demand is expected to have
declined by 2.6 percent in 2003 largely because high prices discouraged
demand in the industrial and electric power.
However, expected growth in the economy, along with somewhat lower
projected annual average prices, are expected to increase demand by about 1.2
percent in 2004. Demand in 2005 is expected to increase by 1.8 percent as the
economy continues to expand and prices ease slightly.
Source: Energy
Information Administration, Short-Term Energy Outlook, January 2004. Need Help? |
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Energy Information Administration, EI |
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