Natural Gas Prices
The price of natural gas has been pretty cheap since the financial crisis a few years ago — much cheaper than many predictions and forecasts have concluded. There are plenty of reasons for this that anyone considering energy investing should understand.
If your goal is to invest in energy at all, then you should read this.
In this article we’ll be discussing the nature of the natural gas market, what some of the causes of natural gas price increases and drops are, and what to expect in the future of the price of natural gas.
The price of natural has has historically had a strong correlation with the ups and downs of the oil market for relatively obvious reasons — both are used as similar industrial energy sources and have strong connections to many of the same market catalysts and causes as listed below.
Causes of Natural Gas Prices
The natural gas market is essentially dictated by supply and demand, just like every other price market. The main supply and demand causes are listed below. This is, of course, just a basic list.
- Varying Weather. Harsh weather conditions can disrupt supply causing higher prices. Cold weather conditions can cause increased consumption for heat and higher prices. Milder winters can create less demand and cheaper prices.
- Economic growth. Strong economic growth increases demand for almost all commodities, including natural gas — this often leads to higher prices.
- Fuel competition. As resources dwindle in some markets, this can put a downward pressure on prices, meaning they increase.
- Price Speculation. Natural gas price futures, ETFs, mutual funds — they all speculative price spikes and even price stabilization to the natural gas market.
Natural Gas Price Forecasts
Because natural gas prices have been fairly cheap over the last few years, most major investment analysts are predicting prices substantial increase between by roughly 2013. While market price predictions should never be blindly trusted, they can be a good indicator of what might be coming next.
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