U.S. natural gas prices started the week with a further slide, after ending last week lower, as meteorologists predict warmer-than-usual weather ahead.
In early morning Asian trade today, the U.S. benchmark traded at $3.20 per million British thermal units, down by 6.5% from Friday, when prices shed 2.5%, after a three-day climb earlier in the week, Bloomberg reported. Official weather forecasts say the cold spell is over and warmer weather will spread across much of the United States towards the end of this week.
Earlier in the year, natural gas prices soared to the highest in years amid freezing winter weather that gripped most of the United States, driving demand for heating much higher, with wind and solar largely unable to respond to this demand surge. As generators leaned more heavily into gas generation, prices spiked.
Now, in addition to the prediction of warmer weather, there are indications that gas drilling is picking up in the shale patch, which also contributed to the latest price movements. Baker Hughes reported last Friday that the number of drilling rigs in the Haynesville shale play had gone up by seven over last week, to a total of 50. That was up from just 20 a year ago, Bloomberg noted in a report on the rig count.
In late January, U.S. natural gas prices rose to the highest in four years, booking a 70% over a single week, hitting $6 per mmBtu and then topping it, inching close to $7 per mmBtu. The price surge came despite abundant gas in storage across the United States. Prices remained strong amid reports of blizzards and heavy snow, but then began to subside this month as the weather, while still cold, calmed somewhat. With the forecasts for warmer weather on the way, prices are likely to decline further this week.
By Irina Slav for Oilprice.com
