The Energy Information Administration (EIA) on Wednesday cut its projected outlook for Henry Hub natural gas prices in 2010.

According to the September Short-Term Energy Outlook, Henry Hub spot prices now are expected to average $4.54/MMBtu, which is 60 cents/MMBtu higher than in 2009 but 15 cents lower than the agency had forecast in July (see Daily GPI, Aug. 11).

Henry Hub spot prices are now are forecast to average $4.76/MMBtu in 2011, which is down 22 cents from its August Outlook.

"These projections reflect updated expectations for economic activity, with forecasted U.S. real gross domestic product (GDP) growth of 2.8% in 2010 and 2.3% in 2011, down from the previous Outlook's growth projections of 3.1 and 2.7% for 2010 and 2011," the Outlook noted. EIA also cut its GDP growth rate forecast for 2011 world oil consumption to 3.3% from the 3.6% level of a month ago.

"EIA projects that the West Texas Intermediate (WTI) spot price, which averaged $77 per barrel in August, will average $77 per barrel in the fourth quarter of 2010 and $82 per barrel in 2011, slightly below the forecasts in last month's Outlook," it stated.

Annual average residential electricity prices are seen increasing "only moderately" in the forecast period, averaging 11.6 cents/kWh in 2010, compared with 11.5 cents in 2009. In 2011 prices are forecast to hit 11.9 cents/kWh, which is virtually unchanged from EIA's previous Outlook.

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