In its January 2017 ‘Short-Term Energy Outlook' (STEO), the US Energy Information Administration (EIA) has confirmed that it expects the Henry Hub natural gas spot price to average US$3.55/million Btu this year, compared to US$2.51/million Btu in 2016.
This price is expected to rise to US$3.73/million Btu in 2018. The higher prices will be attributable to natural gas consumption and exports exceeding supply and imports, leading to lower average inventory levels.
The EIA said: “The confidence interval range for natural gas prices is a market-derived range that reflects trading in New York Mercantile Exchange (NYMEX) futures markets and is not directly based on EIA's supply and demand estimates. The values for the upper confidence interval increase during the winter months compared with the rest of the year, which reflects the higher probability of an increase in natural gas consumption for space heating use as a result of colder weather. By February 2018, the 95% confidence interval ranges from US$1.78/million Btu to US$7.22/million Btu.”
EIA said that it expects natural gas consumption to be higher in 2017 and 2018 than in 2016, based on a return to more typical winter temperatures.
The EIA also confirmed that it expects natural gas exports to increase. Export growth in 2017 will reflect additional capacity coming online at Cheniere Energy’s Sabine Pass LNG terminal in Louisiana. The 2018 growth is driven by the expected start of Cove Point LNG in Maryland in December 2017 and new projects at Cameron LNG and Freeport LNG on the US Gulf Coast during 2H18. The EIA also expects a small increase in pipeline exports to Mexico throughout the next two years.
With expected growth in exports and stable import levels, the EIA expects the US to become a net exporter of natural gas on an annual basis in 2018.
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