Mother Nature Still in Control of Natural Gas Pricing

Mother Nature will continue to be the primary factor influencing the front-month natural gas New York Mercantile Exchange (NYMEX) price for the next 30-45 days.  According to Valerie Wood, President of Energy Solutions, Inc., “Production remains very high and storage inventories are near record levels.  However, natural gas prices have shown reluctance to decline. This reluctance may be due to the fact that one half of winter still lies ahead, and the fact that economic data are improving."

From a technical perspective as it relates to the stock market, the first quarter of 2011 represents the theoretical mid-point of a 4-year bull market. Thus, economic indicators are expected to continue to improve. However, any bullish outlook created by increased demand from an improving economy is projected to be offset with ongoing growth of natural gas supplies. At this time, price weakness is expected to prevail as winter winds down, but for the time being, the natural gas market is taking a "wait and see" approach.

Wood went on to explain, “The caveat to this outlook of anticipated price weakness is some sort of implemented regulation within the Dodd-Frank Bill, which dramatically changes how speculators view the natural gas market. Because speculators (non-commercial players) hold an extreme net short natural gas position, a quick liquidation of these positions would likely initiate a quick, significant price rally.”

Additional information about natural gas pricing is discussed in the January Monthly Edition of The Advisor.  For a limited time, Energy Solutions, Inc. is offering the ability to take a  FREE 60-day trial to The Advisor.  Take advantage of this opportunity and gain the insight needed to develop and implement a strategic natural gas strategy.  Learn more by visiting www.energysolutionsinc.com.

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About Energy Solutions, Inc. 

Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 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.