The market for natural gas in the United States continues to seesaw back and forth, with a recent bout of optimism threatened to be dashed as inventories climb at a faster rate than expected.
Natural gas prices have been under tremendous pressure in recent years as record levels of production have left markets flush with supply. Also, the most recent winter was extraordinary mild, leading to the highest levels of natural gas sitting in storage in decades. That led prices to crash below $2 per million Btu for much of the year to date.
However, market sentiment seemed to have turned once again in recent weeks on the prospect of a hot summer combined with shrinking supply. The prolific shale basins – most notably the Marcellus Shale – have seen output start to decline as both low oil and low gas prices continue to scare away drillers. The slightly more bullish market allowed Henry Hub spot natural gas prices to rise above $2.60/MMBtu, a sharp rise of more than 40 percent in just the past month alone.