The growth of low-priced natural gas supply from Appalachia and Texas appears to be changing the market calculus on winter heating demand this year. With pre-winter gas inventories sitting at their lowest levels in over a decade, prices remain near historic lows. In the coal market, inventories are also at their lowest level in more than a decade, but prices have shown little reaction. For both commodities, an early or colder than normal winter could have a significant impact on pricing. Winter gas prices in some parts of the US suggest squeezes lie ahead. But until demand shows up, the markets for both fuels seem to believe supply will be available when it is needed. In general, the market seems to be saying, “what’s the rush?” Despite low inventory levels in the gas market, recent supply growth has led traders to believe that flexible production should be sufficient to meet residential-commercial heating demand this winter in most areas. Through late September, US gas production has averaged more than 83.3 Bcf/d for the month, according to a modeled estimate from S&P Global Platts Analytics. In the past 12 months, production is up 13%, or about 9.7 Bcf/d, with more… continue reading
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Source: CTRM Center