Tamsin Carlisle
US natural gas prices have fallen to their lowest in seven years as storage facilities fill up ahead of the winter heating season.
A government report signalling lacklustre demand from the housing industry for manufactured goods also helped push the futures contract for September gas as low as US$3.05 per million British thermal units (Btu) on the New York Mercantile Exchange (NYMEX) on Wednesday, a level last seen in August 2002.
NYMEX gas futures have fallen 45 per cent this year, even as crude has rallied. They are about 77 per cent off the peak of roughly $13.50 per million Btu reached in July of last year and could fall further, analysts said.
“The bearishness for gas has increased because there’s nowhere left to put it,” Tom Orr, the director of research at Weeden and Company in Connecticut, told Bloomberg.
“Brimming storage remains a problem,” Michael Fitzpatrick, a vice president for energy at MF Global in New York, said in a research note. The amount of gas stored in underground caverns in the US had surpassed 3 trillion cubic feet, a level not usually reached until late September, he added.
Jim Hackett, the chief executive of Anadarko Petroleum, which is one of the largest US gas producers, predicted storage facilities would be full this autumn, forcing some producers to shut down wells.
A surge in output from large gas shale deposits and falling demand for gas for industry and power generation have combined to create a glut of the fuel in the US.
That is likely to mute the commodity’s response to any imminent threat to Gulf of Mexico gas installations from hurricanes.
Hurricane Bill, the first of the Atlantic season, is forecast to become a major hurricane with winds of up to 180kph as it heads towards the US from the eastern Caribbean.
But meteorologists in the National Hurricane Center in Miami were not expecting it to enter the Gulf of Mexico.
With ample storage, investors have not felt the need to buy gas as a hedge against supply disruptions.
“It will take a huge disturbance to get natural gas to take off,” Cameron Horwitz, an analyst at Sun Trust Robinson Humphrey in Miami, told Bloomberg, adding that storage levels were 600 billion cu ft higher than a year ago. “That’s a lot of gas to burn off.”
Wednesday's NYMEX gas price was equivalent to a crude oil price of about $18.30 per barrel.
In New York yesterday, crude fell back below $69 per barrel, after climbing above $70 following the release of industry data suggesting a bigger than expected drop in US oil stockpiles.
Global Arab Network
Tamsin Carlisle, Copyright The National, this article first appeared in The National on (August 19. 2009 ).
US natural gas prices have fallen to their lowest in seven years as storage facilities fill up ahead of the winter heating season.
A government report signalling lacklustre demand from the housing industry for manufactured goods also helped push the futures contract for September gas as low as US$3.05 per million British thermal units (Btu) on the New York Mercantile Exchange (NYMEX) on Wednesday, a level last seen in August 2002.
NYMEX gas futures have fallen 45 per cent this year, even as crude has rallied. They are about 77 per cent off the peak of roughly $13.50 per million Btu reached in July of last year and could fall further, analysts said.
“The bearishness for gas has increased because there’s nowhere left to put it,” Tom Orr, the director of research at Weeden and Company in Connecticut, told Bloomberg.
“Brimming storage remains a problem,” Michael Fitzpatrick, a vice president for energy at MF Global in New York, said in a research note. The amount of gas stored in underground caverns in the US had surpassed 3 trillion cubic feet, a level not usually reached until late September, he added.
Jim Hackett, the chief executive of Anadarko Petroleum, which is one of the largest US gas producers, predicted storage facilities would be full this autumn, forcing some producers to shut down wells.
A surge in output from large gas shale deposits and falling demand for gas for industry and power generation have combined to create a glut of the fuel in the US.
That is likely to mute the commodity’s response to any imminent threat to Gulf of Mexico gas installations from hurricanes.
Hurricane Bill, the first of the Atlantic season, is forecast to become a major hurricane with winds of up to 180kph as it heads towards the US from the eastern Caribbean.
But meteorologists in the National Hurricane Center in Miami were not expecting it to enter the Gulf of Mexico.
With ample storage, investors have not felt the need to buy gas as a hedge against supply disruptions.
“It will take a huge disturbance to get natural gas to take off,” Cameron Horwitz, an analyst at Sun Trust Robinson Humphrey in Miami, told Bloomberg, adding that storage levels were 600 billion cu ft higher than a year ago. “That’s a lot of gas to burn off.”
Wednesday's NYMEX gas price was equivalent to a crude oil price of about $18.30 per barrel.
In New York yesterday, crude fell back below $69 per barrel, after climbing above $70 following the release of industry data suggesting a bigger than expected drop in US oil stockpiles.
Global Arab Network
Tamsin Carlisle, Copyright The National, this article first appeared in The National on (August 19. 2009 ).
