Energy and Power

Outlook for crude oil prices continues to be uncertain

The volatility in crude oil spot prices is expected to continue, although in narrow ranges compared to what was seen in the early part of this year and 2008.

Natural gas prices expected to see modest rise in 2010

Henry Hub natural gas prices continue to be dragged down by strong production added to already high inventories. The EIA projects natural gas prices to rise modestly in 2010, as a result of expansion in economic activity and lower production levels in response to current drilling pullback. Henry Hub spot prices are projected to average $3.85 per Mcf in 2009 and $5.02 per Mcf in 2010.

The total U.S. natural gas consumption is expected to fall by 2.0% in 2009, mainly due to a drop in industrial natural gas consumption. In the first half of 2009, industrial consumption dipped by 12% on the year, with the decline expected to continue into the second half of 2009.

The U.S. marketed natural gas production is forecast to increase by 1.5% in 2009, before declining by 3.8% in 2010. With the swelling of natural gas inventories to record-high levels, the existing production is expected to be curtailed. Consequently, the marketed production from the Lower-48 non-Gulf of Mexico (GOM) is expected to witness a decline of 5.7% between the first half and second half of the year.