Air hisses out of US gas prices

US natural gas prices have halved in just two years following record-high levels of production in America. And prices could still fall further yet.

US natural gas prices have fallen by almost 50% in the past year to just over $2 per million British thermal units (mBtu) a ten-year low. Gas production hit a record high in America last year, eclipsing the previous peak in 1973. That was due to new drilling techniques that have allowed explorers to tap hitherto inaccessible deposits.

Inventories are at record highs for this time of year, says Dan Strumpf in Barron's. Heating demand was lacklustre in the winter because of unusually warm weather and it is now falling further with the onset of spring. "Gas inventories will only keep rising from here", which suggests America could run out of room to store natural gas as early as October.

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