EIA Says Natural Gas Supply and Demand Coming Into Balance

As we've discussed many times before, the price for natural gas (especially the NYMEX futures price) is primarily determined by supply and demand --- Economics 101. When there is too much supply with the same or less demand, prices go down. And boy, have they gone down! The problem we've struggled with all this year is too much supply. A number of drillers (many in the Marcellus/Utica) have pulled back on production to take some of the supply off the table. A good measure of supply is the inventory or storage number. Natural gas is stored during the "summer" season for use later during the "winter" season. As we began the injection "summer" season earlier this year, natgas inventories were 39% above the five-year average. The U.S. Energy Information Administration (EIA) predicts inventories will have dropped to 6% above the five-year average by the end of October.

---

To view this content, log into your member account. (Not a member? Join Today!)