Natural Gas Prices Continue to Fall


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Mild winter temperatures and steadily rising natural gas production extended this week's natural gas price drop to $2.72 per 1,000 cubic feet in early trading.

Plummetting by 5.7 percent or 17 cents on Wednesday, natural gas prices are their lowest point in at least two years, and with natural gas production ratcheting up across the country, the fuel's price does not look like its headed up anytime soon.

"Last week some forecasts suggested much colder weather was coming in, and now this week those forecasts have backed off," said Kent Bayazitoglu, an analyst with Gelber & Associates in Houston to the Wall Street Journal.

"That's triggering prices to fall further. We knew this month was going to start of very mild, but now we're seeing a return to mild weather until the end of the month, and that's helping the market dig a bigger hole."

By 2013, the U.S. Energy Information Administration is expecting the price of natural gas to rise above the $3, averaging $4.14 per British thermal units, according to its short-term energy outlook report for January 2012.

But if inventories keep setting new records, the glut in the fuel will only deepen.  In December of last year, inventories were at an estimated 3.5 trillion cubic feet, about 12 percent above the same time last year. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Commodities

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