How can this headline be true when the previous post re: EIA data was reported?
EIA Predicts Rising Heating Bills This Winter
U.S. consumers are likely to pay the highest winter natural-gas prices in six years, with colder weather leading to higher consumption and bills up 22% from a year ago, government forecasters said Thursday.
The increase would largely be a return to normal a winter after historically warm temperatures and record-high gas production led to low demand, a record supply glut and record-low prices by March. That spurred more power plants to use natural gas and caused producers to shut down production, which has already caused gas futures to rebound, setting up a winter of higher prices.
The average household is likely to spend $116 more on natural gas this winter, and the bills for all forms of heat are rising, according to the U.S. Energy Information Administration's Winter Fuels Outlook. Electricity prices are also likely to increase 5%; propane up 26%; and heating oil up 38%.
That is largely from weather east of the Rocky Mountains likely to be more than 15% colder than a year ago. That would increase consumption between 5% and 15% in the EIA's most likely scenario. But EIA leaders stressed that last year was a historically warm winter, and the yearly increases in prices and bills aren't far beyond recent norms.
"When you compare them to the five-year averages, natural-gas and electricity prices look much flatter, and heating oil and propane could even be much lower," agency Administrator Adam Sieminski said.
But consumers will pay more, primarily a result from natural gas's strong run in the futures market. Natural gas has made some of the biggest gains on the commodity market in 2016, with prices up nearly 38% for the year and 26% in just two months as of Wednesday's settlement.
Gas-distribution companies and utility commissions often lock in their prices in the summer, which will capture some of those rising prices but possibly limit price spikes for consumers if gas futures continue to rise. EIA forecast residential natural-gas prices to average $10.37 a thousand cubic feet this winter, 11% more than a year ago and the highest since the winter of 2010-11.
Speculators have been betting hard that gas prices would recover from historic lows as power plants increase their consumption and drillers slow down. U.S. producers have fewer rigs running going into this winter than any in the history of Baker Hughes Inc.'s rig count.
Many analysts and traders believe more price increases could be on the way because of those trends. The lowered drilling activity did lead EIA to reduce its forecast for natural-gas production by more than 3% for the second half of this year. It expects gas production to average 77.5 billion cubic feet a day this year, down 1.6% from a year ago, the first annual decline in more than a decade.
Write to Timothy Puko at tim.puko@wsj.com
(END) Dow Jones Newswires
10-13-16 1036ET
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