Natural Gas Analysis Report 8/6/20 - Will Natural Gas Prices Ever Rise???
The oil shale boom in America has caused America to be an importer of oil to an exporter of oil. Natural gas is a by-product of oil exploration and there is so much natural gas that the pipelines and storage tanks are near capacity. So as the oil is being pumped out of the ground, the shale companies just burn it off. The activity in the shale region has depressed the price of natural gas for years.
According to the Energy Information Administration (EIA), a total of 103 coal-fired power plants were converted to natural gas or replaced by natural gas-fired plants in the United States since 2011.
A decade ago, at the end of 2010, the U.S. had 316.8 gigawatts (GW) of coal-fired capacity in the United States. By the end of 2019, as much as 49.2 GW of that capacity was retired, another 14.3 GW had the boiler converted to burn natural gas, and 15.3 GW was replaced with natural gas combined cycle.
Low natural gas prices amid abundant supply, stricter emission regulations, and more efficient technology of the natural gas turbines were the key reasons why natural gas has been increasingly replacing coal-fired capacity in the United States.
Coal plant conversions will continue, according to the EIA, because of the low natural gas prices and the stricter emission standards. In the future, conversions will take place mostly in the Midwest and Southeast.
There are typically two seasons for the U.S. gas market: Summer (April-Oct) and Winter (November-March). Gas is injected into the ground in Summer and gas is withdrawn in Winter to meet demand that rises well above production. And based on the seasonality of natural gas, prices tend to rise from the Fall to the Winter.
So what does this all mean short and medium term for natural gas prices.
Monthly Chart (Curve Time Frame) - monthly demand is at $2.00.
Weekly Chart (Trend Time Frame) – the trend is sideways.
Daily Chart (Entry Time Frame) – although it appears price is breaking out, the chart suggests price is still basing and to wait for some type of confirmation before going long.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
