Storage facilities across the nation are topping off their natural gas inventories and the upcoming winter isn’t expected to be a harsh one, so already stagnated gas prices aren’t going to be going up, according to the Energy Information Administration (EIA). It said Tuesday it expects Henry Hub spot prices to average $2.59/MMBtu through March, compared with $3.35/MMBtu last winter.

“High natural gas inventories and expected warmer weather will lead to lower natural gas prices this winter, which could reduce the heating expenditures for households that heat primarily with natural gas by an average 13% compared to last year,” said EIA Administrator Adam Sieminski.

Monthly average Henry Hub spot prices are forecast to remain lower than $3/MMBtu through June 2016, and to average $2.69/MMBtu in 2015 and $3.00/MMBtu in 2016, according to EIA’s latest Short-Term Energy Outlook (STEO).

Those forecasts are down from $2.81/MMBtu and $3.05/MMBtu, respectively, in EIA’s previous STEO forecast (see Daily GPI, Oct. 6). At the beginning of the year, EIA projected 2015 Henry Hub prices to average $3.44/MMBtu and 2016 gas to average $3.86/MMBtu (see Daily GPI, Jan. 13).

Henry Hub prices averaged $2.34/MMBtu last month, a decrease of 32 cents from September, according to the STEO report. Natural gas futures prices for February 2016 delivery (for the five-day period ending Nov. 5) averaged $2.50/MMBtu.

Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for February 2016 contracts at $1.60/MMBtu and $3.92/MMBtu, respectively. At this time last year, the natural gas futures contract for February 2015 averaged $4.19/MMBtu and the corresponding lower and upper limits of the 95% confidence interval were $2.76/MMBtu and $6.39/MMBtu, EIA said.

Largely responsible for the gas price forecast slide are bulging storage inventories. EIA on Thursday reported a storage injection for the week ending Oct. 30 of 52 Bcf, which brought total storage to 3,929 Bcf, tied for the previous record set three years ago (see Daily GPI, Nov. 5). It was 371 Bcf (10%) above the level at the same time in 2014 and 147 Bcf above the five-year average for the week.

“U.S. natural gas inventories could reach 4 trillion cubic feet for the first time ever in November, especially if above-normal temperatures reduce home heating demand,” Sieminski said. And EIA projected that end-of-March 2016 inventories will be 1,862 Bcf, which would be 240 Bcf above the five-year average.

Total natural gas consumption is expected to average 76.8 Bcf/d next year, up from an estimated 73.1 Bcf/d in 2014 but off slightly from 76.3 Bcf/d this year. The agency projects gas consumption in the power sector to increase by 16.8% in 2015 and then to decrease by 1.2% in 2016. “Natural gas spot prices, which are expected to remain below $3/MMBtu through mid-2016, support high consumption of natural gas for electricity generation in 2015 and 2016,” EIA said. Industrial sector consumption of natural gas remains flat in 2015 and increases by 4.2% in 2016, while consumption in the residential and commercial sectors is projected to decline in both 2015 and 2016.

EIA expects marketed natural gas production will increase by 4.7 Bcf/d (6.3%) and by 1.6 Bcf/d (2.0%) in 2015 and 2016, respectively. Increases in drilling efficiency will continue to support growing natural gas production, despite low prices and declining rig activity, the agency said. Most of the growth is expected to come from the Marcellus Shale, as the backlog of uncompleted wells is reduced and new pipelines come online to deliver Marcellus gas to markets in the Northeast.