News / Economy

    US Natural Gas Prices Drop to Lowest Levels in 18 Years

    FILE - Pipelines running from the offshore docking station to four liquefied natural gas (LNG) tanks at the Dominion Resources Inc. Liquefied Natural Gas facility in Cove Point, Maryland, are seen in a June 13, 2003, photo.
    FILE - Pipelines running from the offshore docking station to four liquefied natural gas (LNG) tanks at the Dominion Resources Inc. Liquefied Natural Gas facility in Cove Point, Maryland, are seen in a June 13, 2003, photo.

    Natural gas prices reached the lowest levels since 1998 on March 1, with spot Henry Hub prices falling to $1.57. The Henry Hub is a gas distribution facility which is widely quoted for U.S. prices because it connects nine interstate and four intrastate pipelines.

    Crude oil prices are dominating media coverage, but history is being made in the natural gas sector. For some context, natural gas markets are regional, so not every country experiences low prices in the way that oil-producing countries do. While natural gas may be trading in the $1 range in the U.S., Europe sees an average of $4.90 and Japan trades at about $9.

    VOA looked at data from the U.S. Energy Information Administration website. Just like crude oil, natural gas production is historically high, which means storage levels are elevated since there is not enough demand to take some of the product out of the system. Natural gas suffered the same fate as the retail sector this past winter due to abnormally warm weather in the U.S. as a result of El Nino phenomenon.

    The U.S. natural gas market is seasonal, with storage buildups between spring and fall, and drawdowns in the winter. Back to the correlation with retailers, because of the warm weather, many of them got stuck with excess inventory and had to write down product not sold, which adversely affected gross margins. That resulted in quarterly and annual earnings losses.

    Interview with Phil Davis of PSW Investmentsi
    X
    Jill Malandrino
    March 08, 2016 6:01 PM
    Phil Davis of PSW Investments speaks to Jill Malandrino on U.S. natural gas prices reaching their lowest levels since 1998.


    The same principle applies to supply and demand in the natural gas and crude oil markets. Demand for natural gas dropped to a 31-year low in recent months, while storage remained at all-time highs.

    Despite the negative data, Phil Davis of PSW Investments is buying stock in the physical commodity of natural gas and the United States Natural Gas ETF, ticker symbol UNG. This type of investment is an exchange-traded security that is designed to track in percentage terms the movements of natural gas prices.

    "Natural gas is regionally priced to the local market. Now, with the advent of liquefied natural gas (LNG) exporting, you now have a set global price. LNG will be exported around the world and supply will draw down," said Davis.

    The U.S. Energy Department has approved projects that may send abroad as much as 283 million cubic meters per day of U.S. gas, and it is considering applications for another an additional amount.  

    With LNG exports currently starting up, the U.S. could emerge as a global gas superpower on par with the current leaders, Russia and Qatar. Global demand for natural gas is expected to be 50 percent higher by 2035 than it currently is.

    You May Like

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Donald Fraser Miles from: Elliot Lake, Canada
    March 09, 2016 5:18 AM
    While there are environmental concerns to drilling in Lake Ontario it being a drinking water source, it has been my belief for some time that rich natural gas deposits exist beneath Lake Ontario between Canada and the US. With proper environmental controls it may be possible to reap them.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9093
    JPY
    USD
    104.27
    GBP
    USD
    0.7612
    CAD
    USD
    1.3233
    INR
    USD
    67.329

    Rates may not be current.