News / Business
Natural Gas Prices No Longer Have Comfort of Storage Surplus
The natural gas storage surplus has dwindled and this has brought fear and uncertainty into the marketplace. Fear and uncertainty usually leads to higher price levels.
Natural gas storage inventories fell by 516 billion cubic feet (Bcf) in the first two weeks of January, taking the year-on-year storage surplus from 286 Bcf at the start of 2010 to just 22 Bcf as of January 15, 2010. By comparison, the surplus to the five-year average has flipped from a positive 316 Bcf to a deficit of 6 Bcf.
“The colder weather really pulled down storage inventories quickly,” says Valerie Wood, President of Energy Solutions, Inc. “Analysts are now changing their ending inventory projections dramatically. The quick declines in storage, combined with weather forecasts calling for a return of winter in February, are pulling natural gas prices higher.”
Some meteorologists are comparing this February to the cold winters of 2003 and 2007. “This is bringing fear and uncertainty into the marketplace, which typically results in higher prices,” says Wood. “If withdrawals are similar to either of these years, ending storage inventories on March 31, 2010 would be closer to 1,400 to 1,500 Bcf, which while lower than what many expected, is still quite adequate for the start of the injection season. However, in the meantime, buyers should be prepared for a potential price rally.”
Learn more about where natural gas prices may move in 2010 in the February edition The Advisor, a newsletter specifically written for businesses as an educational tool and guide about the natural gas industry and price trends. Receive the February edition, as well as a full month of valuable natural gas pricing insight, by taking a free no-strings attached trial to The Advisor for 30 days. Or simply request a complimentary copy of the most recent monthly edition by sending an e-mail to mailto:request-pr@energysolutionsinc.com?subject=Please%20send%20me%20a%20complimentary%20copy%20of%20The%20Advisor 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.
