Natural gas falls from $4 on smaller-than-forecast supply drop

Price Outlook

The U.S. decreased its outlook for prices in a March 12 report. Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.41 per million British thermal units this year, lower than the previous estimate of $3.53, according to the EIA’s Short-Term Energy Outlook.

The forecast for total gas consumption fell to 70.02 billion cubic feet a day from 70.31 billion. Rising prices will curtail gas use for power generation, the agency said.

Gas output rose to an all-time high of 28.5 trillion cubic feet in 2011, led by record output from shale deposits, the EIA said in a report Jan. 7. Shale accounted for 30% of total production in 2011, up from 22% the previous year.

The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 84% of its energy needs in the first 11 months of last year, government data show. If the trend continued through 2012, it will be the highest level of self-sufficiency since 1991.

Bloomberg News

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