Ryan Dezember of The Wall Street Journal reports that prices have tumbled 30% from the recent peak in mid-June as high inventories have upended the usual season calculations. Oversupply of the power-plant fuel persists despite some of the hottest weather on record. Dezember writes:
A glut of natural gas is depressing prices and prompting fresh cutbacks in America’s drilling fields, despite one of the hottest summers on record.
Big producers such as EQT and Coterra Energy are choking back output, waiting to connect new wells to pipelines and delaying drilling projects. They aim to buoy prices that have rarely been lower during the heat of the summer, when air conditioning creates a lot of power demand.
Benchmark natural-gas futures ended Tuesday at $2.198 per million British thermal units, down 14% from a year ago and 30% less than the recent peak in mid-June. […]
Gas executives and analysts say it takes six to nine months for reduced drilling to show up in production data.
“We’re seeing markets function efficiently and producers responding the way you would expect them to respond,” said Eric McGuire, director of natural gas and LNG analytics at energy research firm Wood Mackenzie. “The thing that is shocking is that they haven’t really done this before; it’s a new producer paradigm.”
Read more here.
