EIA Lowers '98 Price Forecast, Sees Strong 1Q99
The Energy Information Administration has lowered its wellhead
price forecast for the year by several percentage points but said
wellhead prices during the first quarter of 1999 should show a huge
increase (28%) from average prices during this year's warm first
In its Short-Term Energy Outlook, the EIA said it is expecting
average annual natural gas wellhead prices to be about 13% lower
this year compared to 1997 levels. The major culprit was the warm
first quarter, which led to a 30% price decrease compared with
1Q97, but high storage levels throughout the injection season also
played a significant role in the weak market.
"With relatively high inventories, wellhead prices might have
been under greater downward pressure this summer had it not been
for a prolonged period of extremely hot weather in much of the
country from June through August," EIA noted. Electric utility use
of natural gas was nearly 20% higher than last year in the second
quarter, and the third quarter figures will probably exceed the
high levels of 3Q97, EIA said. "On balance, we expect wellhead
prices for the third quarter to average about $1.94/Mcf or 8 cents
less than one year ago. For the remainder of 1998 and for all of
1999, a normal seasonal price pattern is projected: prices are
expected to rise in the winter quarters. However, given recent
tendencies in the spot market, we have changed our fourth quarter
projection for wellhead prices to be about 10 cents/Mcf lower than
our previous forecast." EIA expects prices to average $2.16/Mcf in
the fourth quarter and $2.23 in 1Q99.
For 1999, EIA expects a 13% rise in wellhead prices to $2.19,
with the bulk of the increase in the first quarter as winter
weather is assumed to be normal.
©Copyright 1998 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.