LONDON (Reuters) – Natural gas prices have soared in recent weeks to their highest level since early December, but they are now in the midst of another steep rise as oil prices rise and other commodities slump.
The Energy Information Administration said on Tuesday it expected the price of natural gas to rise 0.3 percent in the 12 months to March, or $1.12 per million British thermal units (MMBtu), and 2.3 percentage points in the same period last year.
It forecast a 1.4 percent rise in the next 12 months and a 3.1 percent rise for the next three years.
The increase comes as the energy sector is suffering from a weakening economy, the effects of a weak global commodity price and a glut of supply from shale gas.
The EIA, which is part of the U-verse Group, expects the price to increase about 4 percent in 2018, 6 percent in 2019 and 8 percent in 2020.
Inflation is also likely to remain low, with the price index still rising 0.7 percent this year.
However, the rise is expected to be offset by the drop in the cost of natural-gas supplies, as well as a tightening of financial conditions for gas and oil producers.
“The fall in the price is likely to be less than expected given the strong fundamentals,” the EIA said.