EIA: Henry Hub spot gas price averaged $1.92/MMBtu in May

Loading of the first export cargo at the Sabine Pass LNG terminal (Image courtesy of Cheniere)
Loading of the first export cargo at the Sabine Pass LNG terminal (Image courtesy of Cheniere)

The Henry Hub natural gas spot price averaged $1.92/MMBtu in May, unchanged from the average price in April, according to the U.S. Energy Information Administration.

Through the 2015—16 winter, prices remained relatively low because of lower demand as a result of warmer-than-normal temperatures, record inventory levels, and production growth, EIA said.

EIA expects natural gas prices will gradually rise through the summer, as demand from the electric power sector increases, but forecast prices remain lower than they were last summer.

Monthly average Henry Hub spot prices are forecast to remain lower than $3.00/MMBtu through the end of 2016.

Forecast Henry Hub natural gas prices average $2.22/MMBtu in 2016 and $2.96/MMBtu in 2017, the agency said in its latest Short-Term Energy Outlook (STEO).

Natural gas futures contracts for September 2016 delivery that were traded during the five-day period ending June 2 averaged $2.42/MMBtu.

Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for September 2016 contracts at $1.64/MMBtu and $3.58/MMBtu, respectively.

In early June 2015, the natural gas futures contract for September 2015 delivery averaged $2.69/MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $1.79/MMBtu and $4.03/MMBtu, EIA said.

Gas production and trade

EIA said its most recent survey data indicate a decline in natural gas production in March.

EIA expects production to rise only slightly through the rest of 2016 because of low natural gas prices and declining rig activity. In 2017, production is expected to rise in response to forecast price increases and increases in liquefied natural gas (LNG) exports. Overall, EIA expects production to rise by 1.0% in 2016 and by 2.3% in 2017.

In 2017, production is expected to rise in response to forecast price increases and increases in liquefied natural gas (LNG) exports. Overall, EIA expects production to rise by 1.0% in 2016 and by 2.3% in 2017.

EIA expects natural gas exports by pipeline to Mexico will increase because of growing demand from Mexico’s electric power sector and flat natural gas production in Mexico.

EIA projects LNG gross exports will rise to an average of 0.5 Bcf/d in 2016, with the startup of Cheniere’s Sabine Pass LNG liquefaction plant in Louisiana, which sent out its first cargo in February 2016. EIA projects gross LNG exports will average 1.3 Bcf/d in

The agency projects gross LNG exports will average 1.3 Bcf/d in 2017, as Sabine Pass ramps up its capacity.

 

Source: EIA

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