Global Natural Gas Supplies Could Tighten Further

September 15, 2002--Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Historically-low coal inventories means U.S. natural gas consumption is at a record high, begging the question of just how tight the global market will get should domestic demand stunt exports.

Henry Hub, the U.S. benchmark for the price of natural gas, was trading at around $8.30 per million British thermal units (Btu) early Wednesday. At this time last year, the price was around $3.40. And in its monthly market report for September, the U.S. Energy Information Administration (EIA) raised its forecast for Henry Hub to $9 for the fourth quarter.

Despite this, the EIA said it expected demand from all natural gas end users to increase this year. When natural gas is priced this high, users typically look for alternatives, but those alternatives are at a premium in the domestic market.