Natural Gas: Why Prices Are Headed Lower, And How To Profit
By John M. Yenkes:As natural gas futures drop below $2 per mmBTU for the first time in over a decade, now is a good time to discuss some of the fundamentals underlying the move lower, and explore some potential trading strategies for the commodity.
A drop in demand caused by mild winter conditions across the U.S., along with a record level of new supply from nascent shale gas technology (fracking) are the main economic drivers that have pushed natural gas prices 34% lower this year.Regarding demand, the NOAA recently released a report finding 15,000 state and local temperature records were broken in the last month alone, making it the warmest March ever recorded in U.S. history. Over half of U.S. households rely on natural gas for their winter heating needs. The above average temperatures weighed heavily on demand, which fell nearly 20% below winter averages. This decrease in demand also pushedComplete Story »