Victoria Times Colonist
Natural-gas glut raises threat of price collapse; Warmer winter blamed for falling demand

Saturday, March 31, 2012

Gas remaining in storage after an unusually warm winter will probably increase during the second quarter, topping up facilities months ahead of schedule and further pressuring the market, say industry observers.

The early start to injection season will have serious implications for U.S. natural-gas working capacity, which will be tested in the coming months, said oil and gas analysts Bentek Energy. "Assuming natural gas injections mimic last summer, the trajectory would imply inventories of 4,698 bcf by November, which is 220 bcf higher than total U.S. design capacity," Bentek said in a report.

"The current high storage levels will intensify downward price pressure throughout the U.S. this fall and likely force additional production shut-ins if stronger demand does not materialize this summer."

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