Natural Gas Could Fall Below $2

Bank of America forecasted a NYMEX natural gas price of $2.25 per MMBtu this summer and says that a cooler summer could drive prices below $2.00 per MMBtu for the first time in three years, according to a March 18 Bloomberg article. US gas output will climb to an all-time high this year, 50 percent above levels from 10 years ago, despite the decrease in exploration that Retail Energy Buyer reported last week. Bank of America also cut its full-year average price forecast to $2.85 from $3.90. Falling natural gas prices cause electricity prices to fall as well in most regions, as natural gas is usually the “marginal resource” that determines wholesale energy prices.

Business Insider reported that this is a global phenomenon, with liquefied natural gas shipments growing significantly this year. Andrew Walker of BG Energy said, “After four years of flat supply, we are entering a period of supply growth. 2014 marked the start of a new wave of supply from Australia. This will be joined by the first volumes from the US Gulf of Mexico around the end of 2015.”

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