Natural gas: a story of surplus

Oversupply in the natural gas market looks set to keep prices soft in the near term. Pauline McCallion speaks to the experts about the price outlook for this year and next and what that means for the arbitrage with oil

Natural gas oversupply

Natural gas prices are expected to average $5.03 per million British thermal units (MMBtu) this year, rising to $5.85/MMBtu in 2011, according to a survey of major gas market participants conducted by Energy Risk in April (see table 1). Natural gas markets are likely to be characterised by over-supply well into next year as expectations for high liquefied natural gas (LNG) inventories and, to a lesser extent, the prospect of a US shale gas production boom keep prices depressed.

In 2009 the major

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