Natural Gas Prices drop due to Mild Cold Weather and Plentiful Supplies
Analysts expect prices of natural gas, the nation's most prevalent heating fuel, to stay low. The low prices will eventually be followed by lower electricity and heating costs in the coming months.
The price of natural gas has dropped 29% in a month, to $3.17 per 1,000 cubic feet on Tuesday from nearly $4.50 in late November. The price of natural gas has fallen due to mild winter weather and plentiful supplies.
A Christmas Eve storm is expected for the Midwest and East Coast, and a blast of cold Arctic air is going to move across the United States from the Northwest to the central states.
The upper Midwest should see single-digit temperatures by the weekend, but the colder temperatures will have little impact on the more heavily populated states to the east until next week.
Natural gas is used by half of the nation's households for heating and to generate 26% of the nation's electricity. The prices often rise as winter weather approaches.
However, the prices are expected to remain low in the coming months. Also, the temperatures for the rest of the winter are expected to be close to normal.
Bob Brackett, an analyst at Bernstein Research, wrote in a recent note to investors. He expects natural gas to average in the low 3's into the spring, and a warm winter could push the price below $3.
At this time of the last year, natural gas was near $4.50 and it reached as high as $6.15 in February. Prices in some locations averaged double or triple that amount as pipelines struggled to carry all the gas that was needed.
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