Factors That Affect Current Prices For Natural Gas
Improving production – Natural gas production increased by 2.3 percent from 2005 to 2006. Part of this increase reflects the restoration of Hurricane Katrina and Rita in 2005. Production in coastal regions expanded as drilling increased. Industry in 2006, a record number of drilling natural gas wells in one year and drilling activities in 2007, points to another record is likely. As of September 2007, the number of exploratory and development wells by December surpassed the past year for 2006 is approximately 5.8 per cent. Production is expected to increase by about 1.4 per cent in 2007 and 1.3 percent in 2008. It is expected expansion in 2008, reflects the impact of new thorough-water installations in the Gulf of Mexico that began producing in 2007. A number of countries producing natural gas wells have increased every year from 2000 to 2006, reaching a record level of almost 449000 wells in 2006.
Increasing net imports – Gross imports in 2007 are expected to increase by 6.5 percent over 2006 level of exports, though, is expected to decline by 4.0 per cent. Net imports are expected to rise by about 8.6 per cent in 2007, then 1.4 percent decline in 2008. Most of the expected import growth in the U.S. is CNG. In the first 8 months of 2007, pipeline imports increased by 86 CSC over 2006 while imports of liquefied natural gas increased by 241 CSC, although monthly LNG imports likely declined since then, according to trade press reports.
Increasing need – Natural gas consumption fell by 2.3 percent in 2006 compared to 2005, but is projected to retrieve with an increase of 4.5 percent in 2007, due to return almost to normal weather. Based on data for the first 8 months of 2006 and in 2007 the total consumption of natural gas increased by about 5.0 per cent, due in large part on residential consumption, which increased by 11.8 per cent.
High Oil prices – Several large volumes of customers (chiefly industrial customers and electricity) can switch between natural gas and other fuels such as oil, depending on prices. As a consequence of this relationship between the fuel markets, when oil prices rise, competitive pressures to continue low prices for natural gas declining, and the shift in need for natural gas drives prices upward. Prices for crude oil rose to a record high $ 93 per barrel in October. Geopolitical concerns and uncertainty in financial markets contributed to an increase in oil prices during most of the year. Tight global oil market conditions, is expected to continue by 2008.
Natural Gas reserves – based on reports from underground storage for November 2, natural gas in storage reached an all time record CSC 3545. This is 8.9 percent above 5 years (2002-2006) an average of 3254. Record store-level reflects a popular economy, which prevailed during most of 2007, and the impact of comparatively mild weather in 2006 and 2007 that reduced the need for current consumption. Natural gas reserves are expected to track the level above average by the remainder of 2007 until weather conditions keep close to normal.