News / Business
Natural Gas Prices Expected to be a Rollercoaster Ride for Buyers this Summer
Because bearish fundamentals are taking a backseat to other factors right now, natural gas prices are apt to move higher creating emotional panic buying. However, record-level storage and an oversupplied market will eventually bring some rationale back into the marketplace.
Natural gas demand is down, storage is refilling, liquefied natural gas (LNG) imports are rising, and weather is mild. These bearish fundamentals ultimately point to lower natural gas prices, but fundamentals don’t really seem to matter right now.
“Natural gas appears to be taking its price direction from crude oil and this happens from time to time,” says Valerie Wood, President of Energy Solutions, Inc. “Fundamentals for crude oil are also very bearish right now, but that too doesn’t matter, because right now the U.S. dollar is king. When the dollar weakens, crude oil prices rise because investors look to crude oil as a hedge against inflation. Thus, the U.S. dollar is also having an indirect impact on natural gas price.”
Confidence in the U.S. dollar has weakened worldwide and this has prompted discussions of the development of a supranational currency that could ultimately replace the mighty greenback. “While the potential of this occurring is remote, ongoing discussions about it could further weaken the U.S. dollar,” says Wood. “This would be bullish for crude oil prices and crude oil could pull natural gas prices higher as well. However, the very bearish supply and demand figures will periodically carry some clout. So, we expect a tug of war between technicals and fundamentals, which will lead to a lot of daily price volatility and an emotional rollercoaster ride in the weeks ahead.”
Additional advice on how buyers can best deal with this emotional rollercoaster ride are highlighted in the June 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 June 2009 edition by sending your request to june-request@energysolutionsinc.com or call (608) 848-9589.
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About Energy Solutions, Inc.
