Natural Gas Closes Week Lower
US natural gas futures fell below $7.8/MMBtu, wiping out the significant gains made earlier in the week as US railways and labor unions secured a deal to avoid a train shutdown that would disrupt energy supply throughout the country.
The earlier possibility of a rail strike drove natural gas prices to a 14-year high of $10/MMBtu in August, since a rail strike would halt coal supply and increase coal-to-gas switching activities. In other news, the EIA reported that utilities added 77 billion cubic feet of gas to storage in the week ending September 9th, above projections of 73 billion.
Furthermore, local supply is expected to increase as the Cove Point LNG plant in Maryland shuts down for maintenance in October, halting shipments overseas and increasing domestic utility stocks. This incident contributes to the abrupt postponement of the operation of Freeport LNG’s Quintana export facility to November. Natural gas hit a historical high of 15.78 in December 2005. By the conclusion of the current quarter, natural gas is predicted to sell at $8.55/MBtu.