Natural Gas Prices Will Head Higher on These Critical Factors

Dr. Kent Moors

Natural gas prices, like any commodity, are affected by supply and demand – but weather plays a main role in this energy's cost.

In order to forecast where natural gas prices will be trading in coming months, it's important to look at what's expected for this winter and how much temperatures will differ from region to region.

Here's what we know about how weather will move natural gas prices into 2015…

The Effect of Another Long, Cold Winter on Natural Gas Prices

From the standpoint of temperatures, this winter is likely to be about the same as last year, according to most estimates, although snow falls in New England should be less than last year but heavier in the Mid-Atlantic. Prolonged frigid snaps will undoubtedly keep demand higher in most regions of the country.

That means we can expect U.S. natural gas prices to be between $4.20 and $4.45 per 1,000 cubic feet given a slight increase in overall demand. And as more electricity is generated from gas, that will also contribute to a higher pricing floor.

However, the regional differences will be more pronounced than in recent years. Given the continuing pipeline and distribution problems, prices will be higher in New England than in 2013, with some concerns already expressed for a possible regional shortfall in propane.

In Europe, you can add the geopolitical to the mix, as the likelihood of a continuing Ukrainian crisis will test the ability of Europe to sustain imports of full natural gas consignments from Russia. But the knock-on effect for North American gas prices from Gazprom's European exports will be limited.

But there's another factor that will be a real game-changer for natural gas prices.

Dr. Kent Moors

About the Author

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Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.

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