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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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".
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
-
8 of the best houses for sale with libraries
This week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
By Natasha Langan Published
-
Investors pull money from UK equities as government warns of “painful” Budget
The government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
By Katie Williams Published