Natural gas futures for delivery in December fell 35 cents, or 2.2
per cent, and traded at $2.289 per million British
thermal units, according to the data published by the
NY Mercantile Exchange.
Today’s drop was unexpected due to the forecasts predicting that the U.S. weather might be colder in the next month. Natural
gas typically strengthens during the winter season,
the peak demand period for global gas consumption,
due to the higher heating demand in cold weather.
Market participants expect that the recent drop in gas prices may
push coal to lose further market share as it becomes
more expensive for utilities to use the commodity to
generate power. It worth mentioning that replacing coal consumption
with natural gas reduces greenhouse gas emissions.
A report released earlier this week showed that U.S. natural gas
storage dropped to 3.812 trillion cubic feet, down 3
per cent compared to levels in September
2014. The U.S. Energy Information Administration expects that storage
of October to climb due to adding 35 billion cubic feet to September’s
production.
