The U.S. wholesale natural gas market this summer is likely to look a lot like it did last year, according to a seasonal outlook released by the Natural Gas Supply Association (NGSA). The NGSA analysis examined individual demand and supply factors, and projected their combined impact on natural gas prices for the coming summer, then further identified emerging trends to watch.
the key factors of economy, weather, customer demand, storage and production,
NGSA says that improvement in the economy is the single factor it expects to
place upward pressure on natural gas prices compared to last summer, with all
other factors expected to yield the same pressure as last summer. The
association expects that when combined, the five key factors will have an
overall neutral impact on natural gas prices this summer, compared to the
summer of 2009.
to a slightly warmer than the 30-year average summer weather forecast from the
National Oceanic and Atmospheric Administration, which is similar to last
looked at expected demand from electric, industrial, commercial and residential
customers this summer, and predicts that overall levels of demand would be 2
percent higher than last summer – a welcome sign of economic recovery, but not
quite sufficient to place pressure on prices.
won’t impact overall demand by a significant amount, NGSA says that one sector
to watch is power generation, where it predicts that power generators will
switch to dispatching natural gas rather than coal, due to low natural gas
prices, in a summer repeat of 2009’s coal-to-gas switching. Switching from coal
to natural gas average about 2.25 billion cubic feet per day during the summer
of 2009, and is projected to average 1.6 billion cubic feet per day this
that more natural gas is expected to go into storage this summer in contrast to
last; however, the amounts are roughly comparable, and overall should place
flat price pressure on natural gas markets.
Steady, Reliable Outlook for Natural Gas Projected
July 13, 2010