WHY A DOWNTURN IN NATURAL GAS PRICES?
The May 26, 1998, issue of the Wall Street Journal gave insight into the key factors controlling both near term and beyond natural gas prices. In this article Mr. Terzah Ewing, Staff Report for the Wall Street Journal, stated “despite the short-term pessimism in the trading pits – and a ballooning abundance of the fuel in underground storage tanks – the markets long range view for prices is, relatively bullish.” Mr. Ewing’s analysis of the recent decline in natural gas prices is based on the belief that “natural gas wholesalers who control storage tanks, are betting that they can buy cheaper gas now on the spot market, hoarding it, then retail it later this year at higher prices.” In doing so natural gas wholesalers are betting on a hot summer spurring demand for air conditioning and a cold winter resulting in high heating usage. It is normal for gas suppliers to build up at this time of year. However, the recent steep increase in reserves was unexpected. Although, storage is up for no
