Natural Gas Price Forecast: Natural gas futures for June delivery dropped during morning trading today (Thursday) after the Energy Information Administration's (EIA) new supply report.
By 11:05 a.m., natural gas prices fell 2.22% to $2.60 per million British thermal units (BTUs). The tumble continued a 3% loss in the last week.
Today's decline came after the EIA reported that natural gas stockpiles increased by 90 billion cubic feet last week. That's at the high end of the projected range of 86 billion cubic feet to 90 billion cubic feet, according to analysts surveyed by Platts. Total gas supplies now stand at 1,629 trillion cubic feet - up 737 billion cubic feet from a year ago.
Although supply keeps growing, natural gas prices will move higher.
In fact, there are three changes happening in the industry right now, all of which point to a huge price recovery throughout the year.
Here's what our natural gas price forecast shows for the commodity in 2015...
Natural Gas Price Forecast 2015: Why There's a Rebound Ahead
Natural gas prices had a bad first quarter. Futures plummeted 8.8% during the first three months of the year.
The same went for the rest of the energy industry. WTI oil prices saw a 15% decline while Brent fell about 6%. The S&P 500 energy sector saw an overall decline of 3.6%.
But Money Morning's Global Energy Strategist Dr. Kent Moors says the natural gas trade is undergoing three "super shifts" that will push prices higher.
The first is the switch from coal usage to natural gas usage. Federal environmental regulations are forcing companies to use natural gas because it releases fewer carbon emissions than coal. About one-third of coal-generating capacity in the U.S. from 2012 will be retired by 2020.
"This transition has been going on for some time now," Moors explained. "And while there is a balance forming in several specific regions in the country where coal (even lower grade coal) has reached usage equilibrium with gas, the larger move to gas continues to gain momentum."
The second is the increased use of natural gas in producing petrochemicals. Oil was used in the past - but now ethane (a type of natural gas) demand is expected to grow by more than 600,000 barrels per day by 2018, to 1.6 million bpd.
The final shift is U.S. exports of liquefied natural gas (LNG). The U.S. will begin shipping LNG around the world by the end of the year in order to meet rising energy demand - which will double over the next 10 years. The Department of Energy has approved five export projects since 2012. Cheniere Energy Inc. (NYSEMKT: LNG) is first in line and set to start exporting this year.
With natural gas demand ready to explode, here are a couple ways to get in on the profits...
Natural Gas Price Forecast: How to Profit
- Natural Gas Futures: Most investors are aware how natural gas is used, but not everyone knows how it's traded. It's important to understand what natural gas futures are before trying to make money this way. A natural gas futures contract has 10 specifications - and they all help you determine the best opportunities to trade and sell. Here's a detailed explanation of how natural gas futures work...
- Natural Gas Stocks: After Royal Dutch Shell Plc. (NYSE ADR: A) bought out BG Group Plc. (OTCMKTS ADR: BRGYY) earlier this month, it became clear that M&A will reshape the energy industry in 2015. Small gas companies are about to be seized by larger ones and a new group of heavyweights will lead the market into the "new energy age." These are two oil and gas stocks poised to soar from M&A in 2015...
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