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EIA Short-Term Energy Outlook – February

February 11, 2015 By Josh Kessler

DOE’s Energy Information Administration (EIA) updated its monthly Short-Term Energy Outlook on February 10. The STEO contains price and consumption data on electricity, natural gas, and other commodities. The next update will be completed March 10.

Weather Impacts

Average U.S. heating degree days decreased 10 percent compared with last January. Based on current weather forecasts, EIA believes HDD will decrease by 13 total compared with last year – a slight revision from its of 12 percent last month. EIA projects cooling degree days will increase by 6 percent during warm-weather months (April through September).

Natural Gas Price Outlook

Henry Hub spot prices averaged $2.99 per MMBtu in January, a decline of $0.49 from December. This is also $0.53 below EIA’s forecast from last month of a winter-long average price of $3.52. The Administration now believes that spot prices will average $3.05 per MMBtu this year and $3.47 next year, remaining below $3.00 for the remainder of the winter.

Options and futures contracts, which are indicative of likely price movements, show a wide range of possible prices in the short term. A statistical analysis of contracts for May 2015 delivery show that there is a 95 percent chance the price will fall between $1.79 and $4.11.

Electricity Price Outlook

EIA forecasts steady industrial power prices, with industrial prices falling from 7.03 cents per kWh in 2014 to 6.86 in 2015 then rising to 6.96 in 2016. It forecasts relatively steady commercial prices, at 10.74 cents per kWh in 2014, 10.73 in 2015, and 10.92 in 2016.

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