Current Natural Gas Price Decline Correctly Predicted by Energy Solutions, Inc.
Natural gas prices should weaken as storage inventories build at faster pace, says educational provider of natural gas price information and price trends
VERONA, Wis., May 3, 2013 /PRNewswire/ -- Energy Solutions, Inc., an educational provider of natural gas price information and price trends, recently advised its clients to "sit tight" on natural gas purchases. This ran counter to the advice provided by several financial firms who were promoting the purchase of natural gas commodities.
Specifically, in its April 24, 2013, edition of The Advisor, Energy Solutions, Inc. provided the following pricing advice:
Natural gas prices are being driven higher by financial firm recommendations advising investors to "go long" natural gas futures and to "go short" gold futures or crude oil futures. As investors seek to profit from these recommendations, open interest in the natural gas futures market has exploded. A surge of buying in natural gas futures is pushing natural gas prices higher, but Energy Solutions, Inc. advises patience.
A natural gas price rally, driven by speculative buying, will typically fail without supportive fundamentals of supply and demand. Energy Solutions, Inc. believes this is what will occur for natural gas.
The electric power sector has an economic incentive to gravitate from the use of coal to natural gas. This frees up gas supplies for injection into storage. This factor, combined with ongoing production growth and improvements in pipeline and processing infrastructure, is expected to eliminate concerns over natural gas supply availability this summer. When that becomes evident, natural gas prices will decline, and the front-month natural gas New York Mercantile Exchange (NYMEX) contract could fall below $4 per MMBtu.
On May 1, the front-month natural gas NYMEX price hit a 21-month high of $4.44 per MMBtu. The next day, the Energy Information Administration reported a storage injection of 43 billion cubic feet (Bcf) for the week ending April 26. Within ten minutes of the storage announcement, the front-month natural gas NYMEX price fell by more than $.20 per MMBtu.
Sometimes, it is difficult to be patient when there are other players, like some of the financial firms, advising otherwise. However, the benefit of the patience that Energy Solutions, Inc. has been advising is clients is starting to unfold.
Energy Solutions, Inc. specializes in helping end use businesses develop and implement cost effective natural gas risk management strategies that protect profit margins and eliminate budget variances. To view The Advisor or to learn more about how the advice of Energy Solutions, Inc. can benefit your business, contact Valerie at (608) 848-6255 or visit our website at www.energysolutionsinc.com.
About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With combined experience of more than 50 years in the natural gas industry, our team focuses on helping businesses better understand the natural gas industry in order to improve their competitive edge.
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SOURCE Energy Solutions, Inc.