The U.S. Energy Information Administration (EIA) released the early release version of its 2013 Annual Energy Outlook (AEO2013), which includes projections for U.S. energy markets through 2040 under reference case assumptions. Projections under the reference case include only current laws and policies. The full AEO, which includes side cases, will be available in spring 2013.
The AEO2013 projects strong growth in natural gas production, led by continued development of shale resources. Despite growth in natural gas consumption, AEO2013 projects that the United States will become a net exporter of natural gas by the year 2020—two years earlier and with greater volumes of U.S. natural gas exports than was projected in the Annual Energy Outlook 2012.
Domestic natural gas consumption grows by about 21 percent from 2011 to 2040. Consumption grows most in the electric power and industrial sectors, which are better positioned to benefit from relatively low natural gas prices. Increased use of liquefied natural gas (LNG) for heavy-duty vehicles contributes to growth of natural gas use in the transportation sector, which represents 6 percent of natural gas consumption in 2040, compared with 3 percent in 2011.
The Henry Hub day-ahead price registered an overall decrease for the week, dropping 32 cents per MMBtu through Tuesday before regaining some ground yesterday to close the week at $3.41 per MMBtu, down 7.8 percent. Generally higher-than-average temperatures in many locations helped to lower prices early in the report week, with prices finishing the week higher in some locations ahead of forecasts of colder weather.
At the NYMEX, the January 2013 contract ended the week lower, dropping from $3.801 per MMBtu last Wednesday to $3.700 per MMBtu yesterday, a decrease of 10.1 cents per MMBtu. Prices fell for much of the report week before regaining more than 16 cents per MMBtu yesterday, finishing the week down 2.7 percent. The 12-Month Strip (average of January 2013 to December 2013 contracts) closed yesterday at $3.823 per MMBtu, down 3.2 cents per MMBtu (0.8 percent) for the week.
Certain locations in the Northeast saw prices initially trending significantly lower as very warm weather late in the report week followed seasonally colder temperatures. Prices rebounded toward the end of the week ahead of a return to colder weather. For example, at the Algonquin Citygate trading point (for delivery into Boston), spot prices started the report week at $9.78 per MMBtu and rose 20 cents per MMBtu on Thursday, but dropped to $4.76 per MMBtu on Monday (as temperatures approached 60 degrees) before rebounding sharply on Tuesday and again yesterday, closing at $9.43 per MMBtu (down 3.6 percent for the week). Similarly, prices at the Transcontinental Pipeline's Zone 6 trading point (serving New York City markets), which began the week at $5.40 per MMBtu, fell nearly $1.00 per MMBtu on Thursday, and continued a steady decline through Tuesday before regaining ground yesterday, finishing the report week at $4.34 per MMBtu (down 19.6 percent).