Expect dramatic falls in the gas price

Gas prices could be set to fall heavily as supply exceeds expectations.

After the "dramatic halving" of the oil price since June, says Nick Butler onblogs.ft.com, "there is every chance that gas will follow suit".

After spiking last February amid unusually cold weather, US natural gas futures dropped by nearly a third in 2014. They have now hit a two-year low of $2.9 per million British thermal units (mmBtu).

As with oil, supply has outstripped demand. Production, spearheaded by the US shale revolution, beat expectations this summer, and stockpiles look healthy, at 8% above last year's level. New pipelines in the northeast of the US have enabled producers to get all their output to market, notes Lex in the FT.

The US Energy Information Administration reckons the extra supply "will more than cover any shortfall". Warm weather has tempered demand, making a shortfall even less likely.

"The threat of low inventories in the winter is gone," concludes Kent Bayazitoglu of Gelber & Associates.

No wonder, then, that US shale gas explorers' shares have suffered almost as much as oil explorers' stocks since the summer.

In the long run, more stringent environmental regulation is likely to prompt more industries and homes to opt for natural gas, the cleanest fossil fuel. But for now, as Lex puts it, "do not expect much improvement".

Recommended

Is this the end of the oil era? And if so, what should you invest in?
Oil

Is this the end of the oil era? And if so, what should you invest in?

Oil major BP says we may already have seen “peak oil demand”. What would that mean for your portfolio? John Stepek investigates.
17 Sep 2020
Solid income from a renewable energy "tortoise" fund
Investment trusts

Solid income from a renewable energy "tortoise" fund

GCP Infrastructure plods along compared with its rivals, but offers an attractive yield at the current price
4 May 2020
Royal Dutch Shell slashes its dividend: what now for income investors?
Stockmarkets

Royal Dutch Shell slashes its dividend: what now for income investors?

Shell's dividend cut – its first since WWII – has come as a nasty surprise. And it leaves income investors wondering where to turn now. John Stepek lo…
1 May 2020
The uranium price is finally on the rise – here’s the easiest way to bet on a bull market
Commodities

The uranium price is finally on the rise – here’s the easiest way to bet on a bull market

The uranium price has been quietly creeping up to hit a four-year high. Dominic Frisby explains what’s behind the rise, and picks the best way to inve…
15 Apr 2020

Most Popular

The rising dollar is proving bad news for most other assets – will it last?
Investment strategy

The rising dollar is proving bad news for most other assets – will it last?

Precious metals, stocks and pretty much every other asset has taken a tumble as the US dollar strengthens. Dominic Frisby looks at how long this trend…
23 Sep 2020
Oil producers are back at their Covid-19 lows – is it time to buy?
Oil

Oil producers are back at their Covid-19 lows – is it time to buy?

With demand for oil hammered by Covid-19 and talk of “peak oil demand”, there are lots of good reasons to be bearish on oil producers. So, asks John S…
22 Sep 2020
Why you should stuff your end-of-pandemic portfolio with Chinese stocks
China stockmarkets

Why you should stuff your end-of-pandemic portfolio with Chinese stocks

For an end-of-pandemic portfolio, you need assets that can cope with today’s volatility. And that, says Merryn Somerset Webb, means Chinese stocks.
14 Sep 2020