we return to natural gas, note the fracking factor:
Warm weather, surplus inventory send natural-gas prices plunging
Natural-gas prices have slumped to their lowest for a December in 17 years, heaping more financial pressure on cash-strapped energy companies trying to cope with the collapse in crude oil.
The industry counts on prices for the fuel climbing in the winter heating season, but a combination of unseasonably warm weather and bloated inventories has pressured the market to the point where wells are being shut off in Canada and the United States. Hopes for a sustained improvement in prices are waning.
A longer-term pressure has been massive growth in shale-gas production in regions such as the Marcellus formation in the northeastern United States, and the industry’s new-found ability to increase output quickly when prices and demand dictate.
“What you see is an alarming accumulation of spare production capacity,” Teri Viswanath, an analyst at BNP Paribas, said in an interview in Calgary. “It’s not just supply in the market that we’re measuring, which is, by the way, at a record level. It’s also … that we have a heavy level of inventories, a measure of supply that can be brought to market quickly.”
On Friday, U.S. benchmark natural-gas futures settled at $1.99 (U.S.) per million British thermal units, down about one-third from a year ago and the lowest for a December since 1998.
Canadian gas has also fallen sharply. Wholesale supply at the AECO storage hub in southeastern Alberta fetched $2.11 (Canadian) per gigajoule, down from $3.12 last year, according to the NGX electronic exchange…
Poor Alberta and pity British Columbia’s LNG export plans (the Asian price of LNG is tied to the price of oil).