Shale gale crushing natural gas prices

Thursday, March 03, 2016

Natural gas is the cheapest it's been in nearly two decades, and it could get even cheaper, thanks to U.S. shale drillers.

The U.S. is producing at a near-record pace, but the warm winter has only resulted in more oversupply as the industry heads into the time of year when it starts to store fuel for the next winter. Natural gas futures for April were trading at $1.64 per million BTUs Thursday, the lowest level since late February 1999.

"The Northeast has been the main driver of the growth this winter, really contributing to those record highs. It's also been the driving force of the entire shale revolution of the past five years," said Thad Walker, Platts Bentek energy analyst. In the last decade, the U.S. was looking to import natural gas, but the "shale gale" has resulted instead in massive oversupply.

The latest government data aren't helping. Natural gas futures sank even further Thursday after the weekly storage report showed demand for natural gas last week was well below normal. The U.S. Energy Information Administration said domestic inventories fell by 48 billion cubic feet last week, a shocker when compared to the normal 137 bcf decline usually seen at this time of year.

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