12 January 2010 18:57 [Source: ICIS news]
WASHINGTON (ICIS news)--US natural gas prices will see a sharp 32% increase this year compared with 2009, the Department of Energy (DOE) said on Tuesday, as industrial consumption of gas increases while production declines.
The department’s Energy Information Administration (EIA) said that the annual average Henry Hub spot price for natgas this year will be $5.36/MM Btu, an increase of $1.30 or 32% over the 2009 average of just over $4/MM Btu.
The administration, which is the department’s energy data and analysis arm, also said it expects natgas prices to continue to rise through 2011 as well, averaging $6.12/MM Btu for that out year.
In its monthly short-term energy outlook (STEO), the administration revised upward its month-earlier estimate of 2010 natural gas prices. In December’s outlook the administration had forecast this year’s average Henry Hub spot price would be $4.62/MM Btu.
The EIA’s new 2010 natgas spot price forecast of $5.36/MM Btu represents an increase of 74 cents or 16% from just a month ago.
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The administration said that while total annual
Although total gas consumption this year is forecast to be unchanged, the EIA said that electric utilities are expected to reduce their gas burns by 2.8% this year because of the price increases. Those consumption cutbacks in the power sector will be offset by recovery-driven increases in the residential, commercial and industrial segments.
Industrial consumption of natgas is forecast to increase by 2.5% this year, the administration said.
Natgas production increased by 3.7% last year, but output will fall this year, the administration said.
“While production growth in 2009 was supported by the enhanced productivity of new wells being drilled, steep declines from initial production at these newly drilled wells and the lagged effect of reduced drilling activity are expected to contribute to a 3% decline in 2010 production,” the EIA said.
In its short-term outlook for
The EIA said that the benchmark US crude, West Texas Intermediate (WTI), will average about $80/bbl this year and climb to $84/bbl on average in 2011. Last month the administration had predicted a 2010 WTI average price of $82/bbl.
EIA said that the lower $80/bbl forecast for the 2010 average price reflects anticipated weakening in WTI spot prices over the next few months before prices rise later in the year, the department said.
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