‹ Analysis & Projections

Short-Term Energy Outlook

Release Date: March 7, 2017  |  Next Release Date: April 11, 2017  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Natural Gas

Prices: The front month natural gas futures contract for delivery at Henry Hub settled at $2.80 per million British thermal units (MMBtu) on March 2, a decrease of 36 cents/MMBtu from February 1 (Figure 8). Mild weather prevailed across much of the Lower 48 states in February, and initial data indicate that heating degree days (HDD) were the lowest on record for the month. The warm temperatures contributed to downward pressure on natural gas prices. Although February 2016 and 2017 were both unseasonably warm, February 2017 natural gas prices were higher compared with last year because exports were higher and U.S. natural gas production was lower, leading to lower levels of inventories. However, inventory levels remain above the previous five-year average.

Figure 8: Cooling Degree Days

Warmer weather contributed to below-average draws in U.S. working natural gas inventories for the weeks ending February 3 through February 17. The week ending February 24 posted an injection of 7 billion cubic feet (Bcf), the first February injection on record. The five-year average inventory change for the last week in February is a 132 Bcf withdrawal. For the weeks ending February 3 through February 24, U.S. working natural gas inventories declined by an average of 87 Bcf, 40% lower than the five-year average February decline of 144 Bcf.

Low inventory withdrawals and a counter-seasonal injection have put downward pressure on front-month natural gas prices. The natural gas 1st-13th spread, the discount of front month natural gas prices to prices for delivery further in the future, declined by 31 cents/MMBtu from February 1 to a monthly low of -62 cents/MMBtu on February 21. With the expiration of the March contract, marking the informal end of the withdrawal season, the 1st-13th spread narrowed and settled at -6 cents/MMBtu on March 2 (Figure 9).

Figure 9: Brent and WTI Net Money Manager Positions


U.S. Natural Gas Summary
  2015 2016 2017 2018
Prices (dollars per thousand cubic feet)
Henry Hub Spot 2.72 2.60 3.13 3.56
Residential Sector 10.36 10.05 11.07 11.09
Commercial Sector 7.90 7.26 8.06 8.31
Industrial Sector 3.91 3.52 4.29 4.72
Supply (billion cubic feet per day)
Marketed Production 78.78 77.32 78.93 83.56
Dry Gas Production 74.14 72.31 73.69 77.80
Pipeline Imports 7.20 7.96 7.88 8.11
LNG Imports 0.25 0.24 0.21 0.21
Consumption (billion cubic feet per day)
Residential Sector 12.63 11.99 12.33 12.45
Commercial Sector 8.76 8.55 8.56 8.97
Industrial Sector 20.64 21.11 21.05 21.55
Electric Power Sector 26.34 27.28 25.40 26.87
Total Consumption 74.65 75.13 73.65 76.58
Primary Assumptions (percent change from previous year)
Heating Degree Days -10.2 -5.1 -0.9 7.2
Cooling Degree Days 14.6 4.6 -7.4 -1.8
Commercial Employment 2.4 2.2 1.8 1.5
Natural-gas-weighted Industrial Production 1.3 0.4 0.9 3.6