Natural Gas Prices Will Remain Low Because of Storage

Natural gas storage inventories are currently at 3,788 Bcf.  While the injection season ended on October 31, 2009, injections are expected to continue into mid-November given the moderate temperatures.  The Energy Information Administration (EIA) is expected to release an injection in the range of 10-20 Bcf for the week ending November 6, 2009 today. 

“Everything about storage points to lower natural gas prices, and we don’t expect that to change,” says Valerie Wood, President of Energy Solutions, Inc.  “Inventories are already 379 Bcf higher than last year at this time, and recent predictions that El Niño conditions are going to strengthen is only going to increase the year-on-year storage surplus.”

The winter of 1997-1998 was a year with strong El Niño conditions, and in that winter 1,680 Bcf was withdrawn from storage.  Similarly, the winter of 2006-2007 was a year with moderate El Niño conditions, and in that winter 1,876 Bcf was withdrawn from storage.  If withdrawals for the winter of 2009-2010 are similar to past El Niño winters, starting storage inventories on April 1, 2010, would range from 1,900 Bcf to 2,100 Bcf.  “This range would be a record starting level for storage and it means that injections could average less than 60 Bcf/week and storage inventories on October 31, 2010, would rival today’s levels,” says Wood. “Even if winter is extremely cold, we doubt that inventories on April 1, 2010, will dip below 1,500 Bcf.  Everything about storage is bearish right now.”

Learn more about what is driving natural gas prices in the November edition of The Advisor, a newsletter specifically written for businesses as an educational tool and guide about the natural gas industry.  It keeps companies alert and aware of ever-changing conditions and costs associated with natural gas to help them make intelligent gas purchasing decisions.  The Advisor is written by Valerie Wood, President of Energy Solutions, Inc., a company that specializes in helping manufacturing companies and larger users of natural gas more cost effectively purchase their natural gas supplies. Request a complimentary copy of the November edition of The Advisor by sending an e-mail to request-nov-pr13@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.