Natural Gas Report: Prices Hover Near $4, But Fundamentals Remain Bearish

August 25, 2011

 

Friday brings the latest rig count data from Baker Hughes. Last week, the number of rigs drilling for natural gas in the United States rose by four to 900 — the highest level since February. Already-flush U.S. production may grow even faster if the rig count continues to trend higher.

 

 

Weather forecasts remain bullish, with warmer-than-normal temperatures forecast for much of the nation. But bullish weather all throughout this summer — July was perhaps the hottest since 1955 — has done little to support natural gas; surging production has more than offset the increase in demand from the weather.

On top of that, recent macroeconomic troubles — which could negatively impact industrial demand — are an added burden on natural gas prices. Demand from industrial end-users makes up about 30 percent of total consumption. As the year-over-year inventory deficit declines and storage approaches last year’s record levels, it is likely that prices will fall further from here as summer winds down.

 

NOAA’s 6-10 Day Weather Outlook:

 

 

NOAA’s 8-14 Day Weather Outlook:

 

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