Namely, EIA expects Henry Hub natural gas prices to be 55 cents/MMBtu, about 19% less than last summer’s average.

In the July STEO, EIA changed its forecast for 2019 Henry Hub natural gas prices down from the June STEO, after three months in a row of price reductions. Prices in June averaged $2.40/MMBtu and have fell by 19% since March.

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Spot prices at key trading hubs across the country have traded near to the Henry Hub basis. Prices at the Transcontinental Pipeline Zone 6 trading point for New York City and the Chicago Citygate were both at $2.12/MMBtu, the lowest June average price and a fall of 25% and 23%, respectively, from June 2018.

The recent natural gas price declines reflect relatively mild weather for the start of summer that led to lower than expected natural gas-fired electricity generation, which allowed natural gas inventory injections to outpace the previous five-year average rate

EIA states.

Between April and June, the total net injections into underground storage fields have surpassed the five-year average by 41%, cutting the current five-year average deficit by over 300 billion cubic feet (Bcf).

Moreover, the lower price forecast indicates EIA's updated assessment of US drilling activity and average well productivity, both of which are higher than previously expected.

However, if summer temperatures are warmer than expected, electricity consumption, natural gas-fired electricity generation, and then natural gas prices could be higher than predicted.

EIA expects that as supply growth begins to moderate in late 2019 and in 2020, natural gas prices will likely rise. EIA expects that Henry Hub natural gas spot prices will total $2.50/MMBtu in the second half of 2019 and $2.77/MMBtu in 2020.

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