Premiums of natural gas plunging to record lows in recent years
Natural gas premiums were reportedly at their lowest positions in the past seven years, as global recession lingers for longer than previously expected.
The prices for January saw a typical spike from September. The increase in fully expected every year and usually arrives with the winter months. Yet the discrepancy, though positive, was the narrowest ever posted in the time stretch of previous years, with the last similar minuscule differences recorded in the year 2003.
The year has proven to be rather grim for conventional fuels, with an almost 30% drop registered in gas futures, as US production rates continue to soar, while the nation’s demand falters.
Natural gas futures, though doing considerably better have also seen a dramatic drop in prices over the year, and despite a few random boosts taking place in the market, the volatile nature of the product has proven to be less than desirable.
Numerous weather forecasts predicting warmer than expected winter months in most of the US will also have an impact on the futures, as the demand for heating fuel is expected to fall by almost 30% when contrasted with the winter figures from the past year.
The industrial market in the US did not fare much better than individual households, with the nation’s factories, mills and plants all lowering their gas demands and consumption rates, with more than a billion cubic foot drop from the demand logged in two years ago. Though industrial numbers have seen a slight rise in 2009, this year’s figures have still been fairly disappointing.
Clement weather conditions will also fail to impede production rates, which will then skew the supply to demand ratio even further towards the former, making a recovery even less likely to come in the coming months.
The nation’s stockpiles of gas now stand at a staggering 27 billion cubic feet, a number that will persist if the country’s fuel demands do not see an upturn.
The sheer amount of exploratory rigs in the nation are going through a similar spike in numbers, posting a 42% increase when compared to last year, bringing the total count to 985 rigs.
A reduced prediction of storm activity in the nation’s more bountiful region will promote intensified production, while the same calm weather will then limit demand for the fuel mined.
The immediate future looks to be unfortunate for the market that has been ailing in the past year, at the hands of the lingering recession that has caused the US people to tighten their belts and bring their fuel bills to the absolute minimum.