EIA: LOW NATURAL GAS PRICES TO LINGER

Feb. 27, 1995
The Energy Information Administration has no good news for U.S. gas producers. EIA's short term energy outlook reports spot prices in fourth quarter 1994 averaged 50/Mcf below year ago levels due to high volumes of underground storage and low demand caused by mild weather across much of the country. Figures compiled by Natural Gas Clearinghouse, Houston, place January 1995 spot prices at an average $1.54/MMBTU, down from $1.98 a year previously.

The Energy Information Administration has no good news for U.S. gas producers.

EIA's short term energy outlook reports spot prices in fourth quarter 1994 averaged 50/Mcf below year ago levels due to high volumes of underground storage and low demand caused by mild weather across much of the country.

Figures compiled by Natural Gas Clearinghouse, Houston, place January 1995 spot prices at an average $1.54/MMBTU, down from $1.98 a year previously.

"Continuation of this mild weather through January 1995 is expected to result in low natural gas wellhead prices through first half 1995," EIA said. "The 1995 average wellhead price is expected to decline 7/Mcf compared with 1994.

"In 1996 the average wellhead price is expected to rise by 14 compared with 1995, although most of the 1996 change is related to the temporarily depressed gas market in the current quarter.

"Having grown by 2.5% in 1994, natural gas demand is projected to increase more slowly in 1995 and 1996, along with the economy. Most of 1994's robust growth was attributed to the increase in electricity generating demand."

EIA also predicted that slower economic growth, firmer product prices, and assumed normal weather patterns will slow U.S. petroleum demand growth to 1.3% in 1995 and 1.4% in 1996. Crude oil prices are predicted to climb from $15.65/bbl at the end of December 1994 to $18/bbl by the end of 1996.

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