With winter seemingly passing us by, U.S. natural gas prices have drastically declined. As a result, the negative pressure from surplus gas, combined with price sensitive power burn (e.g., coal generation y-o-y was 35% higher in December) will keep a lid on gas prices, with a ceiling currently around $3.10-3.20/MMBtu. There's an inherent "you never know" factor in the U.S. gas market: trader and speculation influence on gas prices is probably in the 20-30% range. The reason warm winters lower gas prices is obvious: because gas is so critical in heating for homes and businesses, U.S. gas demand typically surges some 30-35% in the winter over the summer. For example, 50% of America's 125 million homes utilize natural gas for heating, and another 40% that use electricity for heat are increasingly sourcing it from gas generation.

Source: Forbes March 04, 2017 15:34 UTC