![US natural gas consumption forecast [source: EIA Short-Term Energy Outlook January 2017]](http://gastopower.co.uk/media/k2/items/cache/68cc0b273188dcf03cb34bcf437b6d68_S.jpg)
Gas-for-power consumption in the US is forecast to decline by 4.4% year on year in 2017, standing at around 20 billion cubic feet/day amid rising natural gas prices which will contribute to increasing coal use for electricity generation, according to the US Energy Information Administration (EIA).
Nevertheless, in 2018 natural gas consumption for power is expected to rise again by 2.7% year on year agains the backdrop of an overall rebound in electricity generation, EIA said in its Short-Term Energy outlook published in January 2018. In 2016, gas-for-power consumption had increased by 4.2% year on year.
Total US natural gas consumption averaged 75.1 Bcf/d in 2016, EIA said, adding it expects gas consumption to increase by 0.3 Bcf/d (0.4%) in 2017 and by 1.5 Bcf/d (2.0%) in 2018. In 2017, “increases in total natural gas consumption are mainly because of higher residential and commercial consumption based on a forecast of colder winter temperatures” it said. “In 2018, the electric power and industrial sectors are the main drivers of consumption growth” it added.
Henry Hub spot prices to increase to avg $3.55/MMBtu in 2017
Meanwhile, Henry Hub natural gas spot prices are expected to increase to an average $3.55/MMBtu in 2017 and $3.73/MMBtu in 2018, from $2.51/MMBtu in 2016, EIA reported.
“Prices generally increased throughout 2016 because of high natural gas use for electricity generation during the hot summer and because of declining production” it said.
Henry Hub spot prices in December 2016 averaged $3.59/MMBtu, when inventories fell below the five-year average. This was the first time the price averaged more than $3/MMBtu for a month since December 2014, it stressed.
Higher residential and commercial space heating demand during the first quarter of 2017 compared with a year earlier (which was very warm) is expected to keep prices above $3.50/MMBtu into April, it pointed out. With natural gas production also expected to be lower than year-ago levels in the first quarter of 2017, EIA expects inventory levels to be below the previous five-year average through much of the winter “putting upward pressure on natural gas prices.”
In 2018 “upward price pressures are expected to continue, as both domestic consumption and exports growth are forecast to accelerate” it added.