Word: price
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...quickly expand gas consumption. At this stage, anyone who can use natural gas instead of crude oil is already burning gas, as the price goes lower still. There is really only one other form of energy that natural gas will replace - coal. Yes, in some geographic areas, it is currently cheaper to use natural gas than coal. Shocking, right...
...demand for gas, despite its low price, stays relatively low. Then layer on the effects of the recession: gas-intensive industrial production is down 12.8% since this time last year, according to Barclays Capital bank estimates. On top of that, there's weather: this has been a cool summer in much of the U.S., so less natural gas has been burned for electricity to power air-conditioning than in recent years. (Read "America's Untapped Energy Resource: Boosting Efficiency...
...anywhere we want; we also cannot transport it very easily. Gas is typically stored in underground reservoirs. The pressure of the gas and the type of reservoir can make injection and extraction cycles difficult and lengthy processes. Until traders see extra storage realized, the natural gas market will be priced in steep contango, meaning prices of natural gas for future delivery will hang far above the current price. The low prices now represent the abundance of unusable and potentially unstorable gas, a situation that will not last. (Read "Can Steven Chu Win the Fight Over Global Warming...
...will have limited options: cap their wells, which could be bad for them in the long term; give gas away for free, which has happened before when producers did not want to halt production; or flare it - burn it off into the atmosphere. With production decreasing because of low price incentives and a great deal of gas likely being lost from capping wells and flaring gas, the oversupply will not last, and the price will be pushed higher by supply and demand fundamentals. The natural gas futures traded on the New York Mercantile Exchange (NYMEX) imply that natural gas prices...
...equivalent of more than 50% of the October contract's open interest. In following its plan to buy and hold natural gas, UNG keeps rolling its position into the next futures month. In other words, every month, UNG sells its enormous long position in the front month - representing the price of natural gas closest to the present - and buys back as much as it can in the next contract month. The idea is that UNG is always trading the most liquid natural gas contract, but the problem is that UNG has become too large for the market...