Natural gas: prices may finally be nearing a bottom

Energy , Natural Gas Mar 17, 2012 No Comments

Natural gasFor those who follow the natural-gas markets, it was no shock to see the commodity fall to its lowest level in a decade, but prices may finally be nearing a bottom as production levels continue to slow.

“Gas is more than a bargain. It is not sustainable at this price,” said James Williams, an energy economist at WTRG Economics. “The question isn’t whether prices will rise, but when.”

Natural gas for April delivery settled at $2.27 per million British thermal units on March 12. That was the lowest settlement level for a front-month contract since February 2002. It closed at $2.28 in New York on Thursday.

“Realistically, it will be difficult for prices to sustain current levels for an extended period due to the fact that current spot prices are approaching cash costs for marginal production,” said Dan Gundersen, vice president of energy finance for Sandstorm Metals & Energy.

And “a reduction in natural gas supply investment is evidenced by a steep decline in the natural gas rig count over the past 4-5 months,” he said.

via Natural gas: U.S. energy market’s best bargain? – Commodities Corner – MarketWatch.

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Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.

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