* Gas demand up most for industry and electric utilities
* US gas production this year highest since 1973
* Winter temperatures to be 1 pct warmer than last year
(Recasts, updates with gas storage levels, trade group official
By Tom Doggett
WASHINGTON, Oct 5 U.S. natural gas demand this
winter is expected to rise 2.4 percent over last year but
plentiful supplies will help keep prices down, an industry
trade group forecast on Tuesday.
Gas demand will be up most in the electric utility and
industrial sectors, rising 7 percent for utilities and 5
percent for industry, the Natural Gas Supply Association said
in its annual winter forecast on Tuesday.
"We expect to see industrial demand coming back strong and
we also expect to see coal-to-gas fuel switching persist
through the winter, if prices remain competitive," said
association President Skip Horvath.
Residential and commercial gas demand is expected to be
lower than last year because households and businesses are
likely to keep their thermostats turned down, as they try to
keep spending in check amid a still sluggish economy.
Weather is the biggest factor that affects natural gas
demand and prices. Government weather forecasters expect
temperatures to be warmer than normal this winter for most of
the southern half of the United States, with normal
temperatures along the East Coast from Maine to Florida.
For the country as a whole winter temperatures are forecast
to be 1 percent warmer than last year, when record snowstorms
and cold blanketed most of the Northeast and mid-Atlantic
states and parts of the South.
Total U.S. gas demand this winter should rise to an average
79.8 billion cubic feet per day from 77.9 billion cubic feet
per day last year.
But U.S. gas production should be high, too, and large gas
supplies from domestic gas production, liquefied gas imports
and available inventories, should keep winter gas prices in
"There is enough supply coming on board to put downward
pressure on prices over the winter," said Horvath.
The Energy Department estimates U.S. gas production this
year still at more than 22 trillion cubic feet, its highest
U.S. natural gas futures NGc1 peaked in January at $6.11
per million British thermal units, the highest price since the
previous winter, and currently stand at $3.73 mmbtu.
If weekly gas storage builds match the five-year average,
inventories will begin the heating season in November at about
3.7 trillion cubic feet (Tcf), or about 6 percent above normal.
Inventory withdrawals usually average about 2 Tcf during
the November through March heating season, but last year,
colder-than-normal winter weather burned nearly 2.2 Tcf of
storage gas, or nearly 10 percent more than expected.
(Reporting by Tom Doggett; additional reporting by Joe Silha
in New York; Editing by David Gregorio)