WASHINGTON (ICIS)--Although US natural gas prices spiked during the harsh North American winter season, prices are expected to moderate over the course of this year but nonetheless will exceed 2013 average prices for 2014 and in 2015, the Energy Department said on Tuesday.
In its monthly short-term energy outlook (STEO), the department’s Energy Information Administration (EIA) noted that Henry Hub natgas spot prices rose from $3.95/MMBtu in the first half of January to a high of $8.15/MMBtu on 10 February before easing to $4.61/MMBtu at the end of the month.
As winter weather persisted, the Henry Hub price spiked again in early March to $7.98/MMBtu, the report said.
But by the end of March, the month’s average price had eased to $4.90/MMBtu.
In the long view, EIA said that it expects US natural gas prices will average $4.44/MMBtu for this year and then ease to $4.11/MMBtu on average for full-year 2015. That outlook compares with the 2013 average gas price of $3.73/MMBtu.
Citing harsh winter weather, the administration noted that working natural gas storage ended March at an estimated 826bn cubic feet (bcf), “the lowest level in 11 years”.
However, “recent outside data sources indicate production has bounced back and is exceeding record highs set in November” last year, the administration said.
In addition, EIA said it is expecting increased domestic natgas production this year and next.
US natural gas production and pricing is of concern to the nation’s petrochemical producers and downstream chemical manufacturers because they are heavily dependent on natgas as both a feedstock and energy fuel.
In oil, EIA said that benchmark West Texas Intermediate (WTI) crude rose from a January average of $95/bbl to $101/bbl in February and March “as a result of strong Midwestern refinery runs and the start-up of the Marketlink pipeline moving crude from Cushing to the Gulf Coast”.
The administration said that expects WTI crude will average $96/bbl in 2014 and $90/bbl for full-year 2015.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy