Natural gas prices fall on the world market

Natural gas prices fall on the world market

Natural gas prices continued to fall, with a mild winter and an overproduction that caused producers in the American shale zone to try to reduce production, but oil companies that produce gas as a byproduct disrupted the plans.

For commodity traders, the floor is likely around $1.50, with February prices now below $1.70 per cubic meter.

This situation led   Chesapeake Energy   to announce in its earnings report earlier this week that it would scale back its drilling rigs to reduce production. 

Natural gas futures took a hit from this move, but were still hovering in the   $1.66 range   on Thursday afternoon, and were down more than 5 percent for the day.

El Niño is a major culprit, weakening trade winds and pushing warm water toward the West Coast, resulting in warm weather conditions that reduce the need for natural gas for heating.

In the mid-1990s, El Niño caused a huge drop in natural gas prices that led to significant layoffs, restructuring and mergers in the industry.

Between 1986 and 1995, there were three El Niño winters – all coinciding with low Henry Hub prices but also with industry restructuring, according to historical research published by Offshore Magazine in the 1990s.

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