News / Business
Natural Gas Prices Expected to Make a Significant Low This Fall
With natural gas storage inventories refilling at record pace and little sign of a tightening of the supply/demand balance, natural gas prices could very well make a significant low this fall with the front-month falling to below $3 per MMBtu.
There just isn’t much out there to prop up natural gas prices. At the current pace, natural gas storage inventories could reach record levels one month ahead of the end of the injection season. Natural gas demand from the industrial sector is still down with the Institute for Supply Manufacturing (ISM) index recording just 44.8 for June. This is the best reading since August, but an index reading below 50 still indicates a contraction, not an expansion.
“The recent rally in crude oil prices was nothing more than a head fake, but it did help to keep natural gas prices supported,” says Valerie Wood, President of Energy Solutions, Inc. “When it became clear that an economic rebound wasn’t around the corner, crude oil prices tumbled and support for natural gas prices weakened as well. The question now is how low will natural gas prices go?”
In late-April, the front-month natural gas NYMEX contract price dipped to $3.155 per MMBtu and given market momentum right now, that price level could very well be breached. “With the exception of periodic price rallies caused by heat waves and tropical storm disturbances, natural gas prices historically decline in the third quarter before staging a substantial rally in the fourth quarter. Now is the time for end use buyers to be developing long-term buying plans because when consumer demand returns, natural gas prices will be poised to rally,” says Wood.
Additional insight on Energy Solutions’ long-term natural gas price outlook is highlighted in the July 2009 edition of The Advisor, a multi-faceted publication that keeps natural gas buyers up-to-date with market-changing events. Request your copy of the July 2009 edition by sending your request to july-request@energysolutionsinc.com or call (608) 848-9589.
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About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 25 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.
