Natural gas prices have been falling ever since new drilling methods were discovered to release the glut of shale gas in the United States.
But it’s recently become evident just how much natural gas potential the U.S. has.
And this has led to the lowest natural gas prices in ten years.
Futures fell on Thursday to $2.15 per 1,000 cubic feet, a drop of 5.7%.
Since new drilling methods have led to the shale gas boom, there have been cold winters and warm summers, says energy analyst Steve Smith.
Prices have fallen and stockpiles have increased, but due to the weather conditions homeowners have also been burning up gas, and the glut hasn’t been fully evident.
This past winter, however, was unseasonably warm, putting many storage facilities at or very near capacity. Smith said:
“All of a sudden, after a mild winter, the glut has been visible for all to see.”
The problem is, facilities won’t be able to store much more. Companies are working to slow down production so that prices can rise again. Chesapeake Energy Corp. (NYSE: CHK) and ConocoPhillips (NYSE: COP) have already done so.
It may, however, mark a shift away from high carbon emissions. In order to cut down the at-capacity supply, utilities will begin to use more natural gas and less dirty fossil fuels in electricity generation.
The supply of natural gas rose 57 billion cubic feet last week. Total supply is now 59% higher than the five-year average.
Oil prices were down Thursday as well. Though nothing has been confirmed, it is rumored that the White House may release emergency oil supplies from the Strategic Reserves.
Europe may also be considering similar measures.
Benchmark U.S. crude was down 2.5% to $102.78 per barrel, and Brent crude fell $1.77 to $122.39 per barrel.
That’s all for now,