Natural Gas Prices Could Climb Higher

As snow and wintery condition blanket the mid Atlantic and eastern seaboards of the United States, one has to believe that the price of Natural Gas would make an impressive move to the upside.  Natural Gas is the single most important product used for heading in the United States.  Natural Gas is easily piped through a broad pipeline infrastructure throughout the continental United States.  In September of 2009, approximately 6 months ago, Natural Gas prices which are traded on the NYMEX futures exchange hit a multiyear low at approximately $3 per MMBT.  Since then, the methane product has climbed more than 60% to slightly above $5 per MMBTU (million of British Thermal Units).  Natural gas approximately 1 year prior to hitting this multi year low has reached an all time high near $13 per MMBTU.  With oil hovering around $70 dollars per barrel, the approximate equivalent price of natural gas should be (oil is 5 times higher on a BCF equivalent) approximately $14 per MMBTU.  So should natural gas continue to climb higher?

Natural gas is plentiful in the United States and until very recently, the inventory held in storage was above the average 5 year rage according to the Department of Energy estimates.

For the week ending January 29^th 2009, working gas in storage was 2,406 Bcf according to EIA estimates. This represents a net decline of 115 Bcf from the previous week. Stocks were 199 Bcf higher than last year at this time and 150 Bcf above the 5-year average of 2,256 Bcf.  Stocks of natural gas are still relatively high, but the trajectory of the withdrawals are continuing to accelerate, which will has the effect of pushing prices higher.  Heavy snow in an area tends to keep the ground cold, which in turn requires more heating fuel.  Additionally, increasing demand from the manufacturing sector will also pull natural gas and push prices higher.