Natural gas price forecasts, which had tumbled for months, may finally be firming up, with the Energy Information Administration (EIA) expecting Henry Hub prices to average $2.97/MMBtu this year and $3.31/MMBtu in 2016.

The 2015 price forecast, released Tuesday in EIA’s latest Short-Term Energy Outlook (STEO), is unchanged from the previous STEO, and the 2016 price forecast is just a penny lower than last month (see Shale Daily, June 9).

Those prices may be confirmation of a price floor hinted at in EIA’s June STEO, which followed months of mostly declining price forecasts. In May, EIA said it expected Henry Hub spot prices to average $2.93/MMBtu this year and $3.32/MMBtu next year, down 14 cents and 13 cents, respectively, from the previous month forecast (see Shale Daily, May 12). As recently as December, EIA estimated that Henry Hub spot prices would average $3.83/MMBtu in 2015, a full 90 cents higher than the latest forecast (see Daily GPI, Dec. 9, 2014).

Henry Hub prices averaged $2.78/MMBtu last month, an increase of 7 cents from May. Natural gas futures prices for October 2015 delivery (for the five-day period ending July 1) averaged $2.85/MMBtu.

Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for October 2015 contracts at $1.92/MMBtu and $4.24/MMBtu, respectively. At this time last year, the natural gas futures contract for October 2014 averaged $4.40/MMBtu and the corresponding lower and upper limits of the 95% confidence interval were $3.37/MMBtu and $5.76/MMBtu, EIA said.

The agency expects monthly average spot prices to remain lower than $3.00/MMBtu this month. A Jefferies LLC equity analyst on Tuesday said domestic natural gas production has more staying power than expected, which should keep the lid on prices through the year, with the long-term New York Mercantile Exchange outlook cut 25 cents to $4.00/MMBtu (see related story).

EIA expects marketed gas production will increase by 4.3 Bcf/d (5.7%) this year and by 1.6 Bcf/d (2.0%) in 2016.

“Despite recent declines, natural gas production remains high, and EIA expects continued growth through 2016, with increases in the Lower 48 states expected to more than offset long-term production declines in the Gulf of Mexico,” EIA said. Most of the growth is expected to come from the Marcellus Shale.

Increasing domestic gas production is expected to reduce demand for imports from Canada and support increased exports to Mexico, particularly from the Eagle Ford Shale. EIA projects liquefied natural gas gross exports will increase to 0.79 Bcf/d next year.

Total natural gas consumption is expected to average 76.5 Bcf/d in 2015, up from an estimated 73.5 Bcf/d in 2014, and decline slightly to 76.4 Bcf/d in 2016. Growth this year is expected to be largely driven by the industrial and electric power sectors, while residential and commercial consumption is projected to decline in 2015 and again in 2016.

Natural gas working inventories totaled 2,577 Bcf as of June 26, which is 662 Bcf more than at the same time in 2014 and 29 Bcf lower than the previous five-year (2010-2014) average. The agency projected that end-of-October inventories will total 3,919 Bcf, which would be 121 Bcf above the five-year average.

“To this point in the inventory refill season, injections have surpassed the five-year average injections by a wide margin,” EIA said.