At 10:45 a.m., natural gas prices today (Wednesday) were down 2.1% and trading at $2.05 per million British thermal units (BTUs). The commodity sank 10% on Monday to $2.06 – the lowest settlement since April 2012 – and hit an intraday low of $1.95 on Tuesday. It's down 10.5% so far this week.
The biggest short-term factor pulling the natural gas price down is today's expiration for "hurricane season" futures contracts.
You see, the Atlantic hurricane season factors into traders' natural gas price forecast because storms threaten production in the Gulf of Mexico and boost demand. But the season traditionally ends on Nov. 30. With today being the expiration date for November futures contracts, many traders who bet on the hurricane rally sold off before contracts roll into December and hurricane season ends.
Mounting natural gas supply is also sending prices lower. According to the Energy Information Administration (EIA), U.S. inventory stands at about 3.8 trillion cubic feet as of Oct. 16. That's 163 billion cubic feet above the five-year average.
And as supply keeps growing, natural gas prices are nearing a bottom.
According to Money Morning Global Energy Strategist Dr. Kent Moors, there are huge changes happening in the industry that will send natural gas demand and prices into a decades-long rally.