The Natural Gas Market As We See It

Each week MXenergy provides its commercial customers with our view of the natural gas market through an email newsletter. I thought this week’s commentary, authored by Juliana Claussen Strutt, may be of interest to a wider audience:

Despite the quiet demand in this shoulder period, natural gas prices increased slightly this week on both the futures wholesale market and daily spot market. There were many factors that contributed to the up rise, including the spike in crude oil and other competing petro products. For those of you thinking it is too early to watch hurricane activity, the first named tropical storm appeared this week.

On the bearish side, liquefied natural gas (LNG) imports have increased significantly in the past few months and natural gas underground storage is approximately 21% above the 5 year average for this same time of year.

The increase in prices this week reflect an uncertainly in the market, as a possibility of active hurricane season and tight supply/demand balance. Residential electricity prices are expected to continue to grow at about 3% per year during 2007 and 2008 as higher fuel costs, particularly for natural gas, are passed through to retail customers.

I would be curious to hear other’s thoughts on the market. Please send an email or post a comment.