News / Business
Natural Gas Prices Reflecting Moderate Temps and Record-Level Storage
Natural gas prices are expected to remain very weak until there is a shift in temperatures to cause storage withdrawals to occur.
The natural gas storage injection season officially ended on October 31, 2009, but even so, injections are expected to continue into November. Moderate temperatures are expected to linger into the week of November 23, and with virtually no heating demand, suppliers will look to inject excess gas supplies into storage, providing there is availability. According to the Energy Information Administration (EIA), storage inventories have reached 3,788 Bcf, which means that overall nationwide storage is 97% full. However, as each field is filled at a different pace, some fields have already reached maximum capacity.
So, where do we go with excess gas? “If excess natural gas can’t be injected into storage, then it is going to get dumped into the spot market. That is primarily why physical natural gas prices have fallen to below $4 per MMBtu in virtually every part of the nation,” says Valerie Wood, President of Energy Solutions, Inc. “The near-term outlook is very bearish, but buyers should still be cautious. It is November, and winter is eventually going to show up – when it does, natural gas prices are going to respond by moving higher. However, storage inventories are going to keep any price rallies from spiraling out of control,” says Wood.
In its November edition of The Advisor, Wood concludes that even if storage withdrawals for the winter of 2009-2010 replicate some of the coldest seasons ever, there will still be close to 1,500 Bcf of natural gas in storage at the start of the injection season on April 1, 2010. “In reality, we expect ending inventories on March 31, 2010 to be closer to 1,900-2,100 Bcf based on historical withdrawal patterns that tend to occur when El Niño conditions are present,“ says Wood.
The Advisor is a newsletter that provides specific insight into natural gas prices and price direction. Learn more about the benefits it can provide your company. Request a complimentary copy of the November edition of The Advisor by sending your request to request-nov-pr11@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.
