The price of natural gas plummeted by 4.3% during the past week. Moreover, other natural gas related assets such as United States Natural Gas (UNG) also dropped by 4.3%. Let’s consider three questions regarding the recent fall in natural gas prices.
Will the recent plunge in natural gas prices continue?
The EIA projected, earlier this month, the price will remain close to $4.5 until the next heating season. The sharp fall in market prices was sudden and could lead the EIA to revise down its estimates regarding the direction of natural gas prices in the coming months.
One factor that could impact the direction of natural gas prices is the progress in weekly injections to storage: According the latest EIA weekly update, last week’s injection to storage was 90 Bcf; the underground natural gas storage was 2,219 Bcf –23.5% below the 5-year average. Last week’s injection was 32 Bcf or 44 Bcf higher than the 5-year average. In the past several weeks the injections to storage were much higher than normal.
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