If you’ve read MDN for any length of time you know we’ve preached the gospel of “lower for longer”–that natural gas prices will remain low, quite low, for a long period of time. How low? Likely in the $2/Mcf range (or just under, or just over). Gone are the days of $3 and $4 gas–at least for a period of years. Although that may have now changed with the double shock of too much oil and the coronavirus destroying demand, which affects natural gas prices. How? Less oil drilling in American shale means less associated gas produced by oil drilling. Less supply equals higher prices. But let’s not go down that rabbit trail right now. We spotted a couple of articles by analysts who predict the current oil price crash will have a profound and long-term effect not only on the oil industry but also on the petrochemical industry–the downstream recipient and user of oil (and gas).
If you’ve read MDN for any length of time you know we’ve preached the gospel of “lower for longer”–that natural gas prices will remain low, quite low, for a long period of time. How low? Likely in the $2/Mcf range (or just under, or just over). Gone are the days of $3 and $4 gas–at least for a period of years. Although that may have now changed with the double shock of too much oil and the coronavirus destroying demand, which affects natural gas prices. How? Less oil drilling in American shale means less associated gas produced by oil drilling. Less supply equals higher prices. But let’s not go down that rabbit trail right now. We spotted a couple of articles by analysts who predict the current oil price crash will have a profound and long-term effect not only on the oil industry but also on the petrochemical industry–the downstream recipient and user of oil (and gas).