Natural Gas...

Natural Gas futures are above $7.00 through March 2010. The price for future delivery in Janruary 2007 is over $11.00. It's no surprise to me that supplies of natural gas are 14.2% higher than the five year average. Anyone with a storage facility can buy natural gas today for $7 and sell a contract for delivery in Janruary for $11. The EIA keeps track of enery inventories, including natural gas. Another thing I looked at was the amount of storage capacity. It's only at 34%, so it's not even close to being a factor. Although prices are 30% higher than they were three years ago, many people are still betting that prices will fall. I see a lot of upside and a small downside. Inflation is still pushing prices higher, and I think natural gas is even harder to conserve than gasoline. At some point, stockpiles will force down prices, but I think they will stay high unless we have a very mild winter. Natural gas production is 14% higher, but all that excess production is being put into storage.