Spot gas prices below $2/MMBtu are likely in late February or early March across much of the US because of mild weather, enormous production and resulting record storage levels, according to a Bentek Energy report Friday.
Additionally, another round of below-$2 prices is likely in the fall when Bentek forecasts storage inventories will test peak working capacity of 4.2 Tcf. Inventory levels near the 2-Tcf mark are also likely at the end of the withdrawal season in March — 300 Bcf higher than the previous record of 1.674 Tcf set in 2009.
Forced withdrawals in late February and March, when heating demand ebbs, could also push prices below $2, the report stated. Bentek, a unit of Platts, noted that this is not the first time the gas market has collided with storage capacity constraints. But both times, in 2009 and 2010, extreme weather and resulting high demand prevented prices from getting crushed.
To access a complete copy of this report, please visit www.platts.com