The end of the natural gas glut

US natural gas prices have been hovering around $3 per million British thermal units (MMBtu) for years now. But the trend may be changing, says Spencer Jakab in The Wall Street Journal.

A multi-year glut, which has depressed prices, is nearing an end. Gas in underground storage in the week to 26 August hit a seasonal record, but a single cold winter could wipe out that surplus, while output is also falling. The number of rotary rigs drilling for gas in North America has slid to an all-time low of 81, down from a record high of 1,606 eight years ago.

Meanwhile, demand for gas as a source of energy has jumped in recent years, with the US electricity sector now using only 1.4 times as much coal as gas, compared with 4.5 times twenty years ago. Prices look set for recovery.