North American Gas Prices Not Reacting to Depleted Stores

Jeffrey Jones of the Globe and Mail reported that gas prices on the NYMEX are only up about 14% from last year’s levels despite drastically reduced inventories following an especially harsh winter season. Forecasters are wondering why prices have not climbed more given the need to replenish stockpiles, according to the Globe.

As quoted in the publication:

Sustained prices at today’s levels or higher are required for power generators to reduce demand by switching to coal, allowing some of that gas supply to be redirected to storage, he said. Today’s markets are still not strong enough to lead producers to crank up dry-gas drilling following a years-long slump.

FirstEnergy Capital Corp. analyst Martin King commented:

Delusional and naive is the way that I would characterize the forward curve right now.

It just seems to be sunshine, butterflies, puppies, kitties: ‘We’re going to grow our way out of this problem, don’t worry.’ I don’t think that’s going to be the case.

Click here to read the full Globe and Mail article.