Tuesday, January 12, 2010

EIA 2010 Natural Gas Spot Price Estimate: $5.21/MMBtu

The EIA released its monthly Short-Term Energy Outlook today.  In it, the EIA predicted the 2010 Henry Hub spot price will average $5.36/Mcf (= $5.21/MMBtu).  This is not very exciting, but it is higher than the average 2009 price of $4.06/Mcf (= $3.95/MMBtu).  For 2011, the EIA predicts the spot price will average $6.12/Mcf (= $5.95/MMBtu).  This is really a statistical analysis of futures prices and not magical data, but it is interesting to take a crack at the future.  It also makes no attempt to try to gauge price volatility over that period.  But one thing that seems certain is, given the ample supply and recovering demand, prices are not likely to move and stay terribly higher for a while.

Other interesting tid bits from the report:
  • Natural gas consumption fell by 1.5% in 2009.  Increased use in electric power generation (switching from coal) nearly offset declines in industrial, commercial and residential use.
  • 2010 consumption is projected to be flat.  The pattern that played out in 2009 is expected to reverse as electric generators use more coal, but the recovering economy charges up the other sectors.

  • Storage is expected to continue to be an issue.  Even though storage withdrawals have been very high of late, the EIA expects that gas in storage will still be 16% greater than the five year average come the end of the storage withdrawal season.
  • Electricity consumption will grow 1.9% in 2010, but most of the supply to soak up that demand will be from sources other than natural gas.

1 comment:

Anonymous said...

Once again I do not understand. EIA expects end-of-March 2010 storage level of 1,734 Bcf; about 16 percent (237 Bcf) greater than the previous 5-year average for that period.
The expectation for next week is 2843 (- 280 Bcf) source: The energy desk. The 5 year average is 2731 source: EIA. Difference after the first week of January : 112 Bcf greater.
And EIA expects 237 Bcf greater end of storage ???