DULLES, Va., Sept. 4, 2001 Natural gas prices continued their downward spiral from the stratospheric heights achieved last January, as the national weighted spot gas average for September baseload gas dropped to $2.32 per MMBtu in trading completed Friday, according to NGI’s Bidweek Survey.
The number was about half the $4.65/MMBtu recorded last September, NGI’s data show.
The average price also was down from the $3.11 MMBtu average for baseload gas in August. The downward trend has continued from January’s all-time average high of $10.97/MMBtu for spot baseload gas.
The continued price drop, with winter just two months away, says the market is comfortable with gas storage volumes at 76% full, well ahead of historical levels. Only a major hurricane that damages Gulf of Mexico production or a fast, cold start to the heating season would boost prices in the next few shoulder months, analysts have told NGI.
Production increases brought on by the high prices earlier in the year and a fall-off in demand from the economic downturn are given the major credit for deflating prices.
Lehman Brothers analyst Thomas R. Driscoll said the “surging gas supply could lead to a sustained period (months, not weeks) of gas prices in the $2-$2.50/MMBtu range….Over the next several weeks we expect many investors to lower gas price forecasts for the remainder of this year, and to perhaps lower 2002 gas price forecasts as well.” Driscoll said he expects third quarter prices to average about $2.90/MMBtu, down from his previously predicted $3.00/MMBtu.
Daily spot gas prices were correcting slightly today, moving up 5-6 cents from Friday’s pre-holiday-weekend softness.
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