U.S. gas prices inch higher in July, EIA shows
By Keefe Borden10 August 2021
Natural gas supplies tighten as exports increase
Spot gas prices at Henry Hub averaged $3.84/MMBtu in July, up from $3.26/MMBtu in June, the U.S. Energy Information Administration reported. In its recent short-term energy outlook, the agency reported it expects gas prices to average $3.71/MMBtu in Q3 and $3.42/MMBtu for all of 2021, up from $2.03/MMBtu for all of 2020.
Prices have risen this year in response to tighter supplies and an increase in domestic demand. U.S. LNG exports have risen while all sectors (except power) have increased their consumption of gas.
By 2022, the EIA expects the price at Henry Hub will average $3.08/MBtu as production climbs again and provides buyers with some relief.
U.S. consumption of natural gas will average 82.5 Bcf/d in 2021, down 1% from last year. Domestic gas consumption is expected to fall in part because electric power producers are expected to switch to coal from natural gas as a result of the stronger prices, the EIA reported.
Residential and commercial gas consumption combined will rise by 1.2 Bcf/d in 2021, while industrial consumption will increase slightly less, by 0.2 Bcf/d. Expanding economic activity and colder winter temperatures in 2021 have caused domestic increase this year, the EIA reported. Looking forward to 2022, the EIA said it expects gas consumption to average 83.8 Bcf/d.
U.S. natural gas inventories ended July 2021 at almost 2.8 Tcf, about 6% lower than the five-year average for this time of year. The colder temperatures earlier this year caused consumers to draw more than average. Meanwhile, the EIA forecast that inventories will end the 2021 injection season, at the end of October, at 3.6 Tcf, about 4% below the five-year average.
Dry natural gas production will average 92.9 Bcf/d in the second half of the year, up from 91.4 Bcf/d in the first half of the year. Next year, the EIA expects production to rise to 94.9 Bcf/d, as stronger gas and oil prices encourage producers.