Pros And Cons Of Natural Gas Pricing

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Natural Gas Pricing Outlook

Supply and demand, technological breakthroughs, severe weather, prices, law & regulation, demographic changes, geopolitical conflicts and disputes are some of the multitude of variables that changes year on year affecting the economy of natural gas sector. Natural gas is more of a volatile economy, even more volatile than crude oil mainly affected by the seasonality and natural gas inventories.

Weather conditions as storms and hurricanes can force the supply side to closure of refineries as it poses threat to workers and facilities. In mid 2000s the hurricane activity along the gulf coast forced natural gas sector to stop operations resulting in the slowdown of total natural gas production. Economy also is an
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Prices have fallen which doesn’t seem to bother the production at all surprisingly. On the other hand demand have risen but have yet to surpass the supply and the gap remains intact driving the prices low. Supply & demand (S&D) plays very big factor considering the current NG pricing. Production have risen significantly from 60,000 mmcfs per day in 2008 to over 90,000 mmcfs per day. We have seen that production level above 70,000 mmcfs per day has the natural gas pricing kept at around $2-$6 per MMBtu, although we have to consider demand while making such case which has grown since then. Having grown demand due to low pricing, the possibility of surpassing the supply can easily result into higher pricing. The fact that the current futures pricing for 2018 around only 10% higher than the current spot price could be expected to have significant change if the demand outlast the supply in current …show more content…
As per new changes in the laws and regulations, including the U.S. Environmental Protection Agency’s (EPA) clean power plan (CPP) and implementation of Mercury and Air Toxics standard (MATS), there are no of coal fired power generating plants are retiring and replaced by that of natural gas. We can expect strong demand of natural gas in Midwest region, due to large scale coal fired generation capacity in near future. Due to water shortage in west, hydro generation have suffered on output giving natural gas demand a push along with the warmer

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