Natural Gas Production Falls While Storage Prices Escalate

Published By : 08 Jun 2016 | Published By : QYRESEARCH

According to the U.S. EIA, the stocks of natural gas in the U.S. have increased by 82 bn cubic feet in the week of May 27, 2016, although analysts had predicted a storage increment of 84 bn cubic feet. There is expected to be a 98 bn cubic feet of injection in the five year average for the week, while the storage increment made last year for the week had reached 126 bn cubic feet. For the week ending in May 20, the storage of natural gas had already increased by 71 bn cubic feet. In essence, the stockpiles have increased 32% beyond the level they were at a year ago and have already crossed 35% beyond the five year average.

Demand and Prices Fall, Production Slows
The IEA still expects and increase in the global demand for natural gas by about 2.1% till 2021. This is much lower to the demand increment shown in the previous five years, but is still above expectations in the light of the current industry situation. The price for natural gas will continue to be in the spotlight while the demand – although at a much lower level – continues to increase at a snail’s pace. On the other hand, the scope of the natural gas industry in Canada has barely shown any mentionable changes. British Columbia holds propositions of about 18 LNG projects, but so far not a single one has gotten the investment green light. Most industry experts agree that the current slump in demand can be attributed to the falling prices of natural gas.

Storage Prices Continue to Rise
Another issue the natural gas industry currently faces is the rapidly increasing price of storage, especially in the U.S. There has been a substantial reduction in the introduction of new storage devices, owing to the growing problems faced by natural gas producers.

The investors of the natural gas industry can consider the potential of natural gas producers in the coming years, instead of the natural gas industry futures, due to the recently experienced warmest winter on record and its related storage shortage.

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