EIA Sees Demand Down 6% in 4Q
The Energy Information Administration is projecting gas demand in the fourth quarter to be 5%-6% lower than it was in 4Q 1997, which was a colder-than-normal quarter. It sees 8.9% fewer heating degree-days this quarter than during the prior year's period. All sectors are showing lower gas demand in this quarter, except for electric utility gas demand, which may hold to levels seen in 4Q 1997. Overall natural gas demand growth this year is now projected to be 2.9% below the 1997 level.
"On the assumption that weather conditions will be normal during the remainder of the heating season and through 1999, we are still projecting broad growth in gas demand next year. An expected growth rate for total gas demand of 4.1% now characterizes our base case outlook for 1999," EIA said in announcing its December Short Term Energy Outlook. "Because most of this growth is predicated on normal levels of heating demand over the next three to four months, a continuation of above-normal temperatures in key heating regions of the United States could drastically reduce or eliminate the kind of significant recovery in gas demand shown in the base case for 1999."
Other experts see year-to-year demand losses as well. In August, Energy Security Analysis, Inc. (ESAI) said that demand for 4Q98 would be 5.42 Tcf, an increase of over 200 Bcf from their 4Q97 numbers. The warm weather has changed their tune, however, and ESAI is now forecasting 4Q98 demand to be 5.164 Tcf, representing a 1% downturn from 4Q97's results. They are also predicting the average cash price of gas for the last quarter in 1998 and the first quarter of 1999 will not exceed $1.85.
WEFA (Wharton Econometric Forecasting Associates) reported in April that 4Q 1998 demand would reach 5.75 Tcf, the highest of all the groups providing numbers. Their latest numbers however, have 4Q98 at 5.63 Tcf, which is 30 Bcf less than their 4Q97 results. WEFA is also saying that the annual cash price average for 1999 will be $1.97. The American Gas Association will be issuing its projected demand figures Tuesday.
EIA said that the very warm weather in November and December is expected to have a lasting impact on storage levels well into next year. "Given this inventory overhang, we are lowering our price projections from an annual average wellhead price of $2.10/Mcf in the previous outlook, to about $1.90/Mcf. Prices above $2/Mcf are not expected to appear until the fourth quarter of next year."
EIA expects average annual natural gas wellhead prices will decline 15% this year from the 1997 annual average. Some of the decline stems from a 24% drop during the unseasonably warm first quarter of this year, but prices for the fourth quarter are projected to be about 26% lower than the fourth quarter of 1997.
©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.