Wednesday, April 11, 2012

T. Boone Calls a Bottom for NatGas

I saw a blurb on CNBC that T. Boone Pickens is calling a bottom for falling natural gas prices just below $2/MMBtu because of declining natural gas rig count.  Both Henry Hub spot ($1.91/MMBtu) and the NYMEX ($1.98/MMBtu) closed below $2 today.

Personally, I have trouble believing that anyone can predict how gas prices will react with the expectation that natural gas storage will fill up in +/- six months.  With the current storage level 934 Bcf above the five year average (pending Thursday's data release) and a mild summer predicted, I don't think it's a stretch to see storage get filled up in early autumn unless there are significant production curtailments. I definitely don't think declining natural gas rig counts are enough to avoid topping out.

But even if we have hit bottom, price-wise, I don't see anyone predicting higher prices.  Is flat-lining at $2/MMBtu the best we can hope for?  I remember last year when prices stuck around $4/MMBtu thinking how good $6 looked.  The bar of expectations keeps getting lower.  WHAM! Thank you sir, may I have another?

1 comment:

Harry Matthews said...

The use of natural gas is becoming popular because our fossil fuels are being depleted. This is the reason why gas flare stack is now common in every gas drill stations.