The Natural Gas Paradox

Last month, the editorial highlighted the effects of the pandemic on energy. The collapse in demand from people staying at home was unprecedented with a barrel of oil trading at -$20. Imagine, sellers, paying buyers to take their oil. Energy producers from Texas to North Dakota are racing to shut down production to reduce the flow of red with each barrel being pumped. Many believe that natural gas would follow the same faith and it did in early April when it traded at $1.55/Dth, a level unseen since 1995. However on that faithful day when oil was under zero, natural gas went up by 9.75%. The cause and effect of shutting down oil production choked the supply of gas. That coupled with the further reduction of gas wells to 81 from last year’s count of 183 is giving notice that Hedge funds and gas speculators for the first time since last May, are going long on rising gas prices. This represents a dramatic shift in sentiment because investors in February had the largest short position.
 
I understand that this gets into some financial workings on the price of gas and there are other priorities during the pandemic nonetheless on May 4, gas was trading at $2.12 up 27% in a month. The retail price of electricity and natural gas remains low because we are still $0.40/Dth below from last year but the window is closing. It is suggested to take a moment and lock in these great rates now!

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