Rising U.S. shale gas production is driving fear out of the futures market, says Goldman Sachs Group Inc., and will constrain prices for the next two decades.
Gone will be the near tripling of costs to $15.78 as in 2005 as traders remain confident the fuel will be there when needed. Natural gas will trade “largely” at $4 to $5 per million British thermal units for the next 20 years, says Goldman Sachs. Societe Generale SA sees prices at $5 through 2019. Bank of America Corp. forecasts $5.50 for 2017, while BlackRock Inc. projects $4 to $5 for the next decade.
Prices were four times more volatile in 2009 than they are today as production grows for the ninth straight year and new pipelines deliver the fuel to customers. Gas for use next winter costs 3.2 percent more than now, the smallest premium for the peak-demand period since 2000. Stockpiles will start the heating season at the lowest levels since 2008. See articles at the tag, "Road to New England."
“The market is rightfully not that worried because you have so much supply that is coming online,” Jeffrey Currie, head of commodities research at Goldman Sachs in New York, said in a June 23 telephone interview. “We have enough flexibility in the supply system.”
Natural gas futures for July delivery slid 15.3 cents to $4.40 per million Btu on the New York Mercantile Exchange, the lowest settlement since May 22. The January contract fell 12.1 cents to $4.576, and its premium over the July contract was 17.6 cents.Much more at the linked article.
Without question, geo-politically, the most interesting thing is that the Mideast is imploding, is at a tipping point, the price of crude oil has hardly moved, and no one in America even seems to notice impending "regime change" in Baghdad.
A big "thank you" to a reader for sending me the linked Bloomberg article.
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