By MATT DAY
NEW YORK -- US natural gas prices are expected to rise in the months ahead as increased demand helps ease the current supply glut, the Energy Information Administration said Tuesday in an updated outlook, but the agency still cut its key price forecasts for the heating and power-plant fuel.
In its May short-term energy outlook, the EIA trimmed its price forecast for natural gas sold at the benchmark Henry Hub in Louisiana to $2.45 a million British thermal units, down 2.4% from the $2.51/MMBtu forecast last month.
The EIA cut its 2013 price forecast by 7%, to $3.17/MMBtu.
The EIA cut its forecast for natural gas prices at the wellhead by 2%, to $2.40 a thousand cubic feet.
A glut of natural gas in the US, caused primarily by the success drillers have had in tapping deposits of gas trapped in shale rock deep underground, pushed prices to a series of decade lows this spring.
The growing surplus has raised concerns that the amount of gas in storage could test the limits of US storage capacity when supplies typically peak in the autumn.
In its latest outlook the EIA sees this as less likely, nudging its October inventory forecast to 4.096 trillion cubic feet, down from the 4.121 tcf projected last month.
The EIA''s most recent estimate of demonstrated peak gas capacity, measured in April 2011, stood at 4.103 tcf.
The EIA increased its outlooks for both US gas production and consumption slightly, to 65.84 billion cubic feet a day and 70.17 billion cubic feet/day, respectively.
Both estimates were up about 1% from the agency''s April outlook.
Dow Jones Newswires