I’ve been looking at natural gas prices lately, thinking about the future. It seems to me that the worst is over and prices will certainly improve. Of course, that’s not much of a stretch because they are so low now. But as Billy Crystal famously said in The Princess Bride, there’s a big difference between mostly dead and all dead.
And yet, bear-market factors are everywhere. Shale-gas production is burgeoning, and the recent Potential Gas Committee report details a substantial jump in the U.S. resource base. It would appear that shale-gas technologies have unlocked copious new supplies.
Too, the volume of gas in storage is running well ahead of last year’s levels, and also above five-year averages. We will likely go into the winter heating season with storage reservoirs chock full. At the same time, domestic industrial demand for natural gas remains soft.
Global LNG production and its potential impact on U.S. gas prices are additional wild cards. New supply trains are rapidly coming on stream around the globe, although worldwide gas demand is down. All this LNG has to go somewhere, and it might well come here.
Counteracting these forces, there are rumblings that production declines are already showing up in the Barnett shale and certain Rockies basins. Some companies have shut in gas production, reluctant to sell into current low prices. In my mind, the huge drop in drilling during the past year surely has to translate into less supply. And, U.S. economic recovery could just possibly be under way.
For no good reason other than a generally optimistic outlook, my personal forecast is for a modest improvement in natural gas prices this fall and winter. Mostly dead means slightly alive, after all.
--Peggy Williams, Senior Exploration Editor, Oil and Gas Investor
Contact me at pwilliams@hartenergy.com
Recommended Reading
President: Financial Debt for Mexico's Pemex Totaled $106.8B End of 2023
2024-02-21 - President Andres Manuel Lopez Obrador revealed the debt data in a chart from a presentation on Pemex at a government press conference.
CorEnergy Infrastructure to Reorganize in Pre-packaged Bankruptcy
2024-02-26 - CorEnergy, coming off a January sale of its MoGas and Omega pipeline and gathering systems, filed for bankruptcy protect after reaching an agreement with most of its debtors.
NGL Growth Leads Enterprise Product Partners to Strong Fourth Quarter
2024-02-02 - Enterprise Product Partners executives are still waiting to receive final federal approval to go ahead with the company’s Sea Port Terminal Project.
After Megamerger, Canadian Pacific Kansas City Rail Ends 2023 on High
2024-02-02 - After the historic merger of two railways in April, revenues reached CA$3.8B for fourth-quarter 2023.
Enbridge Advances Expansion of Permian’s Gray Oak Pipeline
2024-02-13 - In its fourth-quarter earnings call, Enbridge also said the Mainline pipeline system tolling agreement is awaiting regulatory approval from a Canadian regulatory agency.