According to the US Energy Information Administration (EIA), the Henry Hub natural gas spot price should increase by more than 40% in 2017, from US$2.51/MBtu in 2016 to US$3.55/MBtu in 2017 and to US$3.73/MBtu in 2018 (+5% on 2017), due to higher gas consumption and exports, exceeding domestic supply and imports.
In 2016, the annual average Henry Hub natural gas price was the lowest since 1999, owing to a very mild winter reducing gas demand from the power sector. However, in the second half of 2016, declining production and a higher consumption from power plants contributed to increase significantly gas prices, from an average of US$2/MBtu in the first quarter of 2016 to US$2.88/MBtu in the third quarter of 2016. In addition, colder weather in December 2016 led to a higher gas demand for space heating, and then, to higher gas prices.
The EIA expects 2017 prices to remain in line with December 2016 levels, while 2018 prices should increase again. Gas consumption should rise in 2017 and 2018, on the basis of more typical winter temperatures. In the power sector, gas consumption should decline in 2017 due to higher price, but should increase in 2018 (overall growth in power generation), though remaining below its 2016 level.
Domestic gas production is expected to increase in 2017 and 2018, reflecting higher spot prices and pipeline infrastructure buildout, especially in the Marcellus and Utica shale production areas. Gas exports should also increase, in line with the commissioning of the Sabine Pass LNG and Cove Point LNG projects in 2017 and with those of Cameron LNG and Freeport LNG in 2018. With gas imports remaining stable through 2018, the United States is expected to become a net exporter of gas on an annual basis as of 2018.