Consequently, the weakening natural gas prices reflect traders’ concern of another winter of low heating demand, which will further add to a glut in fuel inventories and weigh on prices next year. While the low energy prices have caused a dip in production from shale basins and record demand from power plants over a hot summer has helped diminish a supply surplus, natural gas stockpiles remain above normal levels.
“The extended forecast is not helping prices move higher,” John Kilduff, a partner at Again Capital LLC, told Bloomberg. “We’re going into the winter with a substantial amount of gas in storage.”
As of October 14, inventories were at almost four trillion cubic feet, or more than five percent above the five-year average.
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United States Natural Gas Fund (NYSEArca: UNG)