Natural Gas Loses Yesterday’s Gains

Natural Gas Loses Yesterday’s Gains

According to a report from Dow Jones Newswires, natural-gas futures prices were trading lower Friday on expectations that the rest of winter weather won’t be enough to put a dent in the oversupply of natural gas in storage.

Prices failed to follow through on Thursday’s sharp 7.2 percent rise, as updated temperature outlooks show below normal temperatures limited to a slim area of the nation’s southern border and Gulf Coast into the second half of the month. Most of the country will see normal to above-normal temperatures, a persistent scenario that has slashed demand and allowed gas storage levels to balloon.

Most gains made Thursday were lost today—natural-gas futures for March delivery down 7.4 cents, at $2.479 per million British thermal units, after a low of $2,457/mmBtu.

Data released Thursday by the Energy Information Administration showed the level of natural gas in storage fell by a slightly greater-than-expected level of 132 billion cubic feet last week, amid a brief cold snap. But the surplus of gas in storage expanded to 25 percent above both a year ago and the five-year average for this time of year. In the prior week, the surplus was 21 percent above historical levels.

In fact during a recent address, Obama touted that the United States has “a supply of natural gas that can last America nearly 100 years.” The current administration has also referred to the U.S. as “the Saudi Arabia of natural gas,” and has pledged to get more U.S. vehicles running on natural gas and to have natural gas refueling stations built along select highway corridors. ”

Although we have a supply glut currently, the difficulty and uncertainty in predicting natural gas resources was underscored last month when the Energy Information Administration released a report containing sharply lower estimates.

The agency estimated that there are 482 trillion cubic feet of shale gas in the United States, down from the 2011 estimate of 827 trillion cubic feet—a drop of more than 40 percent. The report also said the Marcellus region, a rock formation under parts of New York, Ohio, Pennsylvania and West Virginia, contained 141 trillion cubic feet of gas. That represents a 66 percent drop from the 410 trillion cubic feet estimate offered in the agency’s last report.

The Energy Information Administration said the sharp downward revisions to its estimates were informed by more data.

Under the agency’s new estimates, the Marcellus shale, which was previously thought to hold enough gas to meet the entire nation’s demand for 17 years at current consumption rates, contains instead a six-year supply. The report comes just five months after the United States Geological Survey released its own estimate of 84 trillion cubic feet for the Marcellus shale.

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