‹ Analysis & Projections

Short-Term Energy Outlook

Release Date: June 6, 2017  |  Next Release Date: July 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 $3.01/MMBtu on June 1, a decrease of 21 cents/MMBtu from May 1 (Figure 8). Inventory levels that are above the five-year average and forecasts of moderate temperatures are contributing to lower prices. For the week ending May 26, natural gas inventories increased to 2,525 billion cubic feet (Bcf), 10% above the five-year average for that time of year, but 13% below last year's record highs at the end of May. The Henry Hub natural gas spot price averaged $3.15/MMBtu in May, 5 cents/MMBtu higher than in April.

Figure 7: Cooling Degree Days

Capital expenditures for 22 U.S. natural gas producers increased year-over-year in the first quarter of 2017 after almost two years of annual declines (Figure 9). After averaging $1.98/MMBtu in the first quarter of 2016, natural gas futures prices rose to $3.06/MMBtu in the first quarter of 2017, a 55% year-on-year increase. Higher prices increased cash flow, which helped to stabilize and eventually increase capital expenditures. With natural gas prices projected to rise by the fourth quarter of 2017, producers are continuing to add drilling rigs. For the week ending June 2, natural gas-directed drilling rig count was 100 rigs higher than this time last year. Increases in rig counts and drilling efficiencies are contributing to EIA's forecast of dry natural gas production rising to an average of 76.6 Bcf/d in 2018, up from an expected 73.3 Bcf/d in 2017.

Figure 8: 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 3.26 3.52
Residential Sector 10.36 10.06 11.02 11.19
Commercial Sector 7.90 7.25 7.99 8.28
Industrial Sector 3.91 3.51 4.31 4.60
Supply (billion cubic feet per day)
Marketed Production 78.78 77.31 78.68 82.43
Dry Gas Production 74.14 72.29 73.30 76.57
Pipeline Imports 7.20 7.96 8.23 8.56
LNG Imports 0.25 0.24 0.21 0.21
Consumption (billion cubic feet per day)
Residential Sector 12.63 12.00 12.19 12.73
Commercial Sector 8.76 8.54 8.56 8.96
Industrial Sector 20.64 21.10 21.37 21.97
Electric Power Sector 26.34 27.28 24.99 25.92
Total Consumption 74.65 75.12 73.41 76.24
Primary Assumptions (percent change from previous year)
Heating Degree Days -10.2 -5.1 0.4 8.5
Cooling Degree Days 14.5 4.6 -8.7 -4.5
Commercial Employment 2.4 2.2 1.7 1.1
Natural-gas-weighted Industrial Production -2.0 1.1 3.2 3.2