Posts Tagged ‘Natural Gas’
Long Tailed Fish Swimming East
Markets adjust. There are perhaps few better examples of that adage than the crude oil and natural gas markets. One way of looking at how these two markets adjust is through the rotary rig count. Baker Hughes keeps track of the number of active drilling rigs in the US (and also internationally). Since July 1987,…
Read MoreCrude Oil and Natural Gas Move to Different Hemispheres
On December 16, 2011, we looked at the relationship between natural gas and crude oil prices (see “Crude Oil and Natural Gas Get a Divorce” here). We looked at how historically, on an energy equivalent basis ($/mmBtu), crude oil (West Texas Intermediate at Cushing, Oklahoma) traded at about a 50% premium to natural gas at…
Read MoreNatural Gas Prices Continue to March Down
March is the last month of the five month winter heating season. As of March 30, the level of US working gas in storage was 2,479 BCF. This is an increase during a time of the year when natural gas is historically withdrawn from storage, not injected. The March 30 level is 927 BCF, or…
Read MoreEnergy Prices Always Go Up (continued)
As discussed on this blog, there is a common perception that energy prices have been, and continue to be, on a one way path upwards. In previous posts we focused on natural gas and showed that rather than rising, natural gas prices have, in fact, fallen dramatically, over both the short run and the long…
Read MoreOFO (No Room at the Inn)
Huh? What does OFO mean? First, a step back. The US natural gas pipeline and distribution system can be thought of as a large container with producers injecting natural gas (supply) and customers withdrawing natural gas (demand). Last year, during 2011, the US consumed 24.4 trillion cubic feet (TCF ) of natural gas, or, on…
Read MoreLiquefied Natural Gas (LNG)
The development of a liquefied natural gas export trade was identified in a previous article as an influence that would put upward pressure on natural gas prices. To follow is an overview of where the US liquefied natural gas markets have been and where they may be headed. But first, what is liquefied natural gas?…
Read MoreHow Low Can They Go?
How low can natural gas prices go? We may find out soon. First some background. US natural gas demand varies considerably over the course of a year, driven primarily by natural gas usage related to heating. During peak winter months, natural gas demand exceeds the production capacity of North American natural gas wells. Natural gas…
Read MoreNatural Gas Price Drivers
We have noted previously on this blog that natural gas prices have declined dramatically over the last three years. On January 19, 2012 the February futures contract settled at $2.32 per million Btus. This is lower than natural gas prices have been in a decade and we are in the winter heating season, a time…
Read MoreBest Friends? – Natural Gas and Electricity Prices
We have looked at historical and forward natural gas prices. How have electricity prices been behaving? The graph above shows the monthly average of electricity prices at PJM West (a trading hub where electric generation is concentrated) spanning the 131 month period of time of January 2001 through November 2011. Like natural gas, electricity prices…
Read MoreNatural Gas Prices – Looking Ahead
We have looked extensively at historical natural gas prices, both nominal and real. What does the market tell us about where natural gas prices may be headed in the future? The above graph shows the monthly “forward curve” for natural gas at four different points in time. The forward curve represents the collective thinking of…
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