Weak Economy Keeps Natural Gas Prices in Check

A weak U.S. economy and plenty of natural gas supplies will undermine wholesale gas prices this winter, an industry trade group forecast Thursday.

Helping to keep gas heating costs in check will be expected above-normal temperatures for most of the country, the highest gas production rates since the 1970s, and only a small rise in gas demand, the Natural Gas Supply Association said in its yearly winter forecast.

Overall, the trade group said its "analysis of natural gas market fundamentals indicates relatively stable wholesale price pressure this winter when compared to last heating season."

NGSA does not forecast specific natural gas prices.

For the week ended Sept. 26, natural gas inventories swelled by 87 billion cubic feet, the U.S. Energy Department said on Thursday. The increase outpaced a forecast increase of about 62 billion cubic feet.

U.S. natural gas inventories at the start of the winter heating season on Nov. 1 are forecast to total 3.450 trillion cubic feet, down from last year's record 3.545 trillion cubic feet, the NGSA said.

On top of those inventories this winter will be the highest domestic gas production in three decades, averaging 57.5 billion cubic feet of gas per day, up 7.9 percent from last winter's 53.3 billion cubic feet a day.

"Significant increases in production should result in downward winter-to-winter price pressure on the natural gas market," the trade group said.

Winter imports of liquefied natural gas are expected to be up 25 percent at 1 billion cubic feet per day.

At the same time, the NGSA said it expected the U.S. economy "will be stagnant" and temperatures to be warmer than normal, which should result in a small increase in total gas consumption due in part to less gas use in the declining manufacturing sector.

Winter natural gas demand is forecast at 78.5 billion cubic feet a day, up just 2.3 percent from last winter's 76.7 billion cubic feet a day, the trade group said. 

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