As oil prices reversed a downward trend and rose over the weekend on the news of more Nigerian political problems (James Hamilton explains why this is important), the roller coaster of emotions that is the natural gas market continued unabated.
Just over two months after prices hit an all-time high amid fears of shortages this winter, the natural gas market is flush with a record amount of gas and, as a result, natural gas prices are in full retreat. A U.S. government report last week reflected that natural gas supplies in underground storage facilities are almost 45% above what is normal for this time of year and now speculation is increasing that a record amount of gas will be left over from winter as the weather warms in the midwest and northeast U.S. this spring. As a result, prices for natural gas settled last Friday at $7.182 a million British thermal units, which compares with the $15.378 per million British thermal units closing price on December 13th. The drop in prices is allowing industrial buyers of gas to enter the long side of the market and hedge their risk of higher prices in the future.
No word yet from Bill O’Reilly on how the big oil and gas companies allowed such a situation to occur.