According to projections from the Energy Information Administration (EIA), continued declines in overall natural gas consumption should keep prices between $4 to $5 (U.S.) per Mcf going into 2010, which is good news for end users operating Cat natural gas-fueled generator sets for prime and peak-shaving applications.
EIA projects total natural gas consumption to decline by 1.9 percent in 2009 to 62.2 billion cubic feet (Bcf) per day and by another 1.1 percent in 2010. While the broad economic downturn led to a drop in total consumption in 2009, low prices have contributed to a 2 percent increase in natural gas use in the electric power sector from January through August of this year compared with the same period in 2008.
The Henry Hub spot price averaged $4.12 per Mcf in October, $1.06 per Mcf higher than the average spot price in September. Although prices have more than doubled since reaching a low of $1.83 per Mcf on Sept. 4, EIA expects any further price run-up to be limited through the remainder of the year. High storage levels and resilient domestic production are expected to keep prices around $5 per Mcf in the coming months, even as space-heating demand increases and economic conditions improve. Beyond the winter, limited demand growth constrains price increases through the forecast. The projected Henry Hub spot price averages $4.03 (U.S.) per Mcf in 2009 and $5.01 (U.S.) per Mcf in 2010.
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