Natural gas is the third-largest energy source in America and the price of this fuel has been on a long-term decline since 2011, yet the previous Fed’s decisions to raise interest rates seem to be heading us into a potential future where prices are even more slashed. Demand for natural gas is forecasted to increase over time, despite this fact that the overall market supply of natural gas may not be able. The result will likely be more dramatic price oscillations and an ongoing rollercoaster ride for those involved in Natural Gas production consultations and consumption – who have now been warned by numerous financial analysts that they need to position themselves accordingly.
Many financial analysts believe that the next major upturn in natural gas prices will be up to 20% higher than this current levels, likely due to a proposed new well stimulation technique called hydraulic fracturing – or fracking. Economists from Deutsche Bank have suggested that increased demand for natural gas from industries could lead to prices as high as $150 per million Btu, but the actual price of natural gas is expected to remain in the $7-$10/MMBTU range for at least another year.
Natural gas rallied sharply.
Low natural gas prices over the past couple of years have led many to believe that they may stay at these new, lower levels a bit longer, but many analysts are not so sure. A number of articles that were written in 2016 by industry analysts – both at large firms and small independent traders – have warned against taking the current trend of low natural gas prices for granted. Their predictions and analyses pointed toward long-term low Natural Gas price trends being close to an end, and suggested that higher prices were sooner than later.
Prediction for Natural Gas prices:
Although the prediction is that prices will rebound in the coming year, many believe that we’ve already seen the lowest point in natural gas supply and demand. The balance between supply and demand has shifted sharply toward natural gas as a result of cheap gas prices over a number of years. Many financial analysts believe that this was both a temporary phenomenon and that it will be until natural gas prices begin to change favorably – likely due to the proposed practice of fracking.
Forecasters predict a rebound in natural gas prices
However, there are still many that believe that the current period of low natural gas prices will last longer than most think. Several energy analysts have been predicting a turnaround in the market for several years now and believe it is coming sooner rather than later. There have been numerous articles referencing the sharp turn that natural gas had taken in 2016 and the fact that it has not followed through to the levels many thought were possible. The reason for this, as has been pointed out repeatedly in the past several years, is that most of these analysts have failed to take into account that the United States was able to produce incredible amounts of natural gas from shale gas deposits in recent years – effectively resulting in a huge oversupply.
Prediction for Natural Gas prices
The reason that a number of people are predicting that natural gas prices will continue to rise is due to the fact that it is difficult for an economy to sustain the high levels of employment even in a low price environment. This means that prices will have to rise, however they still need to rise in such a way as to keep strong economic growth going without bankrupting businesses and workers. This can be accomplished by increasing prices at a gradual pace and keeping overall economic spending at all-time highs, which has been happening during this recent period of low natural gas prices.
