Natural gas prices are poised to rebound in 2021, with Henry Hub spot prices on track to average $3.01/MMBtu for the year, nearly $1 higher than 2020 prices, according to updated projections from the U.S. Energy Information Administration (EIA).

steo natural gas prices

In its first Short-Term Energy Outlook of the new year, published Tuesday, the agency offered up a forecast for improved economic activity and rising energy use in the year ahead after Covid-19 put a damper on both in 2020.

EIA’s macroeconomic assumptions, based on IHS Markit forecasts, include a projected 4.2% increase in U.S. real gross domestic product (GDP) in 2021, followed by a 3.8% increase in 2022. This would reverse the 3.5% decline in GDP observed in 2020. 

The rising GDP would contribute to an increase in total energy use...