The US Energy Information Administration raised its third-quarter Henry Hub price forecast to $4.20/MMBtu, up 5 cents from its July forecast, but dropped its fourth-quarter projection by 19 cents to $4.19/MMBtu, according to the agency's August short-term energy outlook.
The agency also dropped its 2011 price forecast by 3 cents and lowered its 2012 price by 13 cents compared with its forecast a month ago.
"EIA expects that the Henry Hub price will average $4.24/MMBtu in 2011 and $4.41/MMBtu in 2012. Although the 2012 average reflects some tightening in supply as domestic production growth slows, prices have remained relatively low over the past few years as a result of abundant production," the agency said.
Compared with its prior outlook in July, the agency raised its Q3 supply forecast by 730,000 Mcf/d to reach 58.58 Bcf/d and dropped its Q4 projection by 430,000 Mcf/d to reach 71.10 Bcf/d.
Due to recent scorching weather, the agency also increased its forecast for gas consumption by power plants in the third quarter to 28.3 Bcf/d, up 4.2% from the previous month's forecast of 27.2 Bcf/d.
"Extremely hot weather seen in July throughout most of the country contributed to an increase in consumption of natural gas for electric power generation to meet increased cooling demand," EIA said.
