Original post:
From the AP via Yahoo:
Natural gas prices plummet to seven-year lows; many will see huge cost cuts for heat
Natural gas prices tumbled again Thursday, hitting new seven-year lows after the government reported more supplies were put into storage as the entire country pares down on energy usage.That will mean huge savings for a lot of people this winter when the heating bill arrives.
On Monday, Spokane, Wash.-based utility Avista Corp. said it wants to reduce natural gas prices for its Oregon customers to the lowest levels in five years. And in the Midwest, Alliant Energy Corp. and Wisconsin Public Service Corp. both predicted heating bills would drop around 20 percent.
"Any savings we get, they get," Alliant spokesman Scott Drzycimski said.
Natural gas for October delivery gave up 19 cents to $2.525 per 1,000 cubic feet on the New York Mercantile Exchange. Prices dropped as low as $2.50 per 1,000 cubic feet -- the lowest since March 2002 -- after the government reported that U.S. natural gas supplies grew again last week and are now nearly 18 percent above the five-year average.
Natural gas, a key energy source for power plants, has plummeted to less than a third the price it fetched last summer, and its contract on the Nymex gave up nearly 23 percent in the past six trading days....MORE
See also:
Aug 22: "Is it Time To Buy Natural Gas? Let's Look at The Charts"
...As you can see natural gas gets the worse grade possible. The pivot point for natural gas today is 3.12 and I have been calling for a target of 2.90. I know some pretty smart traders that have a 2.00 target on nat gas in the future
Has natural gas hit bottom? Not yet
Natural Gas: "Supply/Demand Won't Balance Until Second Half 2010"
UPDATE: Bloomberg is also on the story, with a lot of detail:
Natural Gas Tumbles to Lowest Since March 2002 on Supply Gain
Natural gas futures fell in New York to the lowest level since March 2002, after a government report showed stockpiles expanded more than average to a record for this time of year.Supplies rose 65 billion cubic feet in the week ended Aug. 28 to 3.323 trillion cubic feet, the Energy Department said. Inventories are the highest for that week since the department began publishing data in 1993. Stockpiles typically gained 64 billion cubic feet for the period in the past five years.
“We’re well supplied and there’s so little demand,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. “Some people are starting to question the economic recovery and that adds more pressure to gas.”
Natural gas for October delivery fell 19.5 cents, or 7.2 percent, to $2.52 per million British thermal units at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Gas has declined 55 percent this year. Futures touched $2.50, the lowest since March 6, 2002.
Overall U.S. gas consumption may contract by 2.6 percent as the recession that began in December 2007 cuts demand, the Energy Department said in its monthly Short-Term Energy Outlook on Aug. 11.
Gas use at factories is forecast to tumble 8.6 percent this year because of the recession, the department said.
“People are beating up on natural gas because they can,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Supplies are high, so they’re really pressuring the market to the downside.”
Weather Effect
Summer heat, which can increase demand for electricity from gas-fired power plants for air conditioning, is dissipating and there are no immediate threats from storms to output in the Gulf of Mexico, and that is weighing on futures, Flynn said....MUCH MORE
