A natural gas industry group expects natural gas prices to rise slightly but to remain stable this winter because heating demand will return to normal while supplies remain ample.
The Natural Gas Supply Association said Wednesday in its annual winter outlook that natural gas prices, which averaged $2.75 per thousand cubic feet between November and March last season, may trend slightly upward for this heating season.
Natural gas futures traded at $3.42 in New York Wednesday morning. That's near their high for this year, but slightly below where natural gas traded last year at this time.
Last year was the warmest heating season on record. That reduced demand for natural gas even as domestic drillers were increasing production from shale formations across the U.S. Natural gas prices dropped below $2 per thousand cubic feet — to their lowest levels in 10 years — as the heating season drew to a close.
Forecasters expect temperatures this winter to be closer to normal, which would generate 20 percent more heating degree days than last winter. That is a measurement used by the energy industry to gauge demand.
Demand from industrial customers and electric utilities is expected to stay roughly flat while residential and commercial customers are expected to burn about 16 percent more gas this winter than last.
There will be far fewer natural gas wells completed this year because drillers have pulled back in the face of low prices that have made drilling unprofitable in many locations. But supplies will remain ample because storage levels are high and production is expected to stay high thanks to gas wells already completed and wells that produce natural gas along with oil.