The low supplies of natural gas and the increasing demand might push natural gas futures prices to record highs this summer
Port St. Lucie, FL (PRWEB) June 13, 2008
Natural gas futures prices can see a record increase in prices based on the cooling demand season, hurricane season and the Warner-Lieberman bill, if it passes. "The low supplies of natural gas and the increasing demand might push natural gas futures prices to record highs this summer".
The Warner-Lieberman bill is an aggressive greenhouse gas reduction bill which will probably cause a huge shift from coal to natural gas by the power production industry. This would increase the demand and decrease the underground supplies of natural gas and can likely send natural gas futures prices to record highs. Visit http://www.tkfutures.com/natural_gas.htm to learn more.
Natural gas futures prices have been steadily climbing this year because underground supplies are down 15% from a year ago and slightly below the 5 year average, according to the Energy Information Administration. This decrease in supplies has occurred because of flat natural gas production for the last 7 years. This lack of a production increase is accompanied by an increase in demand of 9.8%. Stagnant production and increasing demand might lead to all time natural gas futures prices.
Natural gas is used by approximately 20% of US electricity generation facilities. The rapid rise in coal and oil prices is encouraging many in the power generation companies to switch to natural gas to produce electricity. This increase in demand is happening at the same time that supplies are down. The Gulf of Mexico Independence Hub began to leak causing the shutting down of almost one billion cubic feet of capacity a day. Canada has had problems with its natural gas output which is causing problems for the US to offset domestic shortfalls with Canadian imports. Visit http://www.tkfutures.com/education.htm to learn more.
Emerging markets such as India and China have had an insatiable appetite for liquefied natural gas (LNG) because of a lack of coal production and soaring demand for electricity. Foreign buyers' willingness to pay a premium for LNG is causing many natural gas producers to ship LNG overseas instead of selling it domestically. Japan has had record imports of LNG to offset their struggling nuclear energy production. Visit http://www.tkfutures.com/natural_gas_futures_natural_gas_options.htm to learn more.
The cooling and hurricane seasons coincide and could cause a price spike in natural gas futures prices this summer. The mid-Atlantic, Texas and Mid-west electricity markets are especially vulnerable to a natural gas futures price spike because of their lack of spare storage capacity during the cooling demand season. The all time high for natural gas futures occurred because of Hurricane Katrina's destruction of natural gas platforms and pipelines in various parts of the Gulf of Mexico. Oil and natural gas platforms are evacuated as the storm approaches and production stops. However, keep in mind that the commodity markets usually have factored in potential hurricane damage before the hurricane hits. Past commodity futures market reactions to hurricanes are no guarantee of similar responses to hurricanes in the future. Visit http://www.tkfutures.com/basics.htm to learn more.
The author of this article is a 14 year veteran of the natural gas futures and options markets and the President of T & K Futures and Options Inc. Futures and option investing is very risky and only risk capital should be used. Past performance is not indicative of future results. Substantial risk of loss can occur in futures and options trading.