The average natural gas futures prices for the upcoming heating season will be less than $4/MMBtu, the lowest level entering the winter months since 2001-2002, the Energy Information Administration (EIA) said.

The EIA estimates that the so-called “winter strip,” the average gas futures price for the contract months November through March as settled on Nymex, will be $3.86 MMBtu during the 2011-2012 heating season. The expectations for average winter gas prices have not been this low since the winter of 2001-2002, when they averaged $3/MMBtu.

Last Friday the Nymex gas futures settled at $3.783 for December delivery, $3.892 for January delivery, $3.900 for February delivery and $3.874 for March delivery.

“Winter price expectations, as reflected through the winter strip on Nymex, peaked at almost $12/MMBtu in 2005 in the aftermath of supply disruptions related to Hurricanes Katrina and Rita. Starting in 2009, late fall expectations for average winter natural gas futures prices dipped under $5/MMBtu as domestic natural gas production from shale plays grew rapidly,” the agency said.

The winter strip is a closely followed measure of market participants’ price expectations. In markets such as New England and California, where natural gas prices often set on-peak, wholesale power prices, the Nymex winter strip for natural gas also can influence expectations for forward wholesale power prices, the EIA said.

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