The outlook for natural gas prices, at least over the next year or so, is bleaker than it has been in decades, according to a recent report from IHS Markit. A driving factor in the firm’s forecast is oversupply from the Permian Basin.

Pipeline infrastructure that is coming online is expected to unleash associated gas from the Permian Basin’s vast oil production, overwhelming the market and pushing average Henry Hub prices below $2 per million British thermal unit (MMBtu) for 2020, the IHS analysts said. This would be the lowest average price in real terms since the 1970s, and in nominal terms, since 1995.

Demand is not the culprit. In fact, IHS noted domestic demand for natural gas is robust, having increased by an annual average of 14 billion cubic feet per day (Bcf/d) since 2017, while exports present another market for an additional 3 Bcf/d of LNG that is forecast for 2020.

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