Monday, June 13, 2016
Natural gas prices are on the rise. But can they stay that way?
The mercury is rising, and so are natural gas prices. Buoyed by warm weather and increasing power demand in much of the country, natural gas prices staged a modest rally last week. Prices at two Wyoming trading hubs crested above $2 per million British Thermal Units for the first time since at least February. That marks a welcome sight for the state’s beleaguered gas drillers, who have struggled with a grossly oversupplied market throughout the year. There have been other positive signs. Storage injections for the week of June 3 were below their yearly averages as utilities consumed more gas in response to rising temperatures. That has slowed the buildup in inventories, which are now near historic levels. “The rebound in prices is favorable, but there are headwinds that remain in place,” said Richard Hastings, an analyst at Seaport Global Securities. Indeed, natural gas producers find themselves in an odd predicament. An exceedingly hot summer could push natural gas prices higher still. But that would come as little help, as utilities would begin to turn on now shuttered coal units, reducing gas demand...more