Natural Gas Up Nearly 100% From April Lows
Sober Look | Nov 22, 2012 01:47AM ET
The US natural gas in storage is finally showing a more seasonal pattern, with the first sign of declines due to seasonal demand increases. This rise in demand was helped by low temperatures in the Northeast that followed Hurricane Sandy.
With better demand fundamentals - especially after the hot summer that burned off some excess supply via increased power usage (see discussion ) - natural gas continues to rally. Henry Hub spot price is now about 100% above the lows reached in April.
In the long run, a number of pipeline projects should reduce excess supplies from the Marcellus Shale area, lowering regional price differentials and providing some stability to the business.
EIA: As production in the Northeast United States has grown, particularly from the Marcellus, insufficient infrastructure has led to excess supply and depressed prices in some areas. Several major pipeline expansions and new projects are planned in the coming years to help further ease constraints in moving gas out of the Marcellus Shale region.
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