Record-high natural gas production growth will keep a lid on prices this year, with 2018 Henry Hub prices now expected to average $2.96/MMBtu, but upward pressure will push average prices to $3.10/MMBtu in 2019, according to the Energy Information Administration (EIA).

“With U.S. natural gas production rising to record levels this year, prices will likely be lower than they would be otherwise, against a backdrop of low inventory levels and increased demand from the power sector,” said Administrator Linda Capuano.

The 2018 price estimate in EIA’s latest Short-Term Energy Outlook (STEO), which was released Tuesday, is down compared with the $2.99/MMBtu in the previous STEO, while the 2019 forecast is up from the previously forecast $3.07.

New York Mercantile Exchange contract values for November 2018 delivery traded during the five-day period ending Aug. 2 suggest a price range of $2.33-3.48/MMBtu, encompassing the market expectation of Henry Hub prices in November at the 95% confidence level, EIA said.

The front-month natural gas futures contract for delivery at Henry Hub settled at $2.82/MMBtu on Aug. 2, a decrease of 5 cents/MMBtu from July 2.

“The Henry Hub natural gas spot price averaged $2.84/MMBtu in July, 13 cents/MMBtu lower than in June,” EIA said. “Both natural gas futures and spot prices fell despite the much hotter-than-normal weather for July. U.S. cooling degree days averaged 11% higher than normal for July, which contributed to higher natural gas demand.”

EIA estimated that gas consumption for power generation reached a record high in July and will average 27.81 Bcf/d this year, up from 25.34 Bcf/d in 2017.

That high demand likely slowed the pace of inventory injections last month, according to the agency. Last week, EIA reported a 35 Bcf build into natural gas storage inventories for the week ending July 27, well below market expectations that clustered around a build in the low 40 Bcf range. Inventories remained 565 Bcf lower than the five-year (2013–17) average.

EIA estimated that dry natural gas production, which averaged 73.6 Bcf/d last year, reached 81.8 Bcf/d last month, an 8.4 Bcf/d increase compared with July 2017.

“March through July saw the largest year-on-year increases in natural gas production on record, as drilling productivity improvements contributed to accelerated production growth,” EIA said.

Dry gas production is forecast be an estimated 81.1 Bcf/d this year, up 7.5 Bcf/d compared with 2017 and a record high, with a further increase to 84.1 Bcf/d in 2019, EIA said.

Pipeline exports of natural gas, which averaged 6.7 Bcf/d in 2017, are expected to average 7.0 Bcf/d in 2018 and 8.5 Bcf/d in 2019, according to the STEO.

“Increasing natural gas production in the United States and the completion of new pipelines that carry U.S. natural gas to demand centers in Mexico contribute to the expected increase,” EIA said.

In addition, EIA forecasts exports of liquefied natural gas will increase to 3.0 Bcf/d this year and 5.1 Bcf/d next year from 1.9 Bcf/d in 2017. Total U.S. net gas exports are expected to average 2.0 Bcf/d in 2018 and 5.4 Bcf/d in 2019, compared with 0.3 Bcf/d in 2017.