From the Wall Street Journal
Natural gas production in the U.S. Northeast could drop sharply in early 2017, says S&P Global Platts, which could cause prices to spike in the coming winter.
A large glut of natural gas has built up over the past year as a mild winter cut demand for the heating fuel and production remained high despite low prices.
But natural-gas futures and the shares of natural-gas producers have surged in recent weeks on expectations that the oversupply is due to shrink as production falls and weather-driven demand returns to normal. Futures have already rallied to an eight-month high, up 33% since late May.
A new report from S&P Global Platts bolsters that thesis.
Natural-gas output in the Northeast has climbed in recent years even as producers have slashed spending and removed drilling rigs. That’s because new pipelines allowed them to bring previously drilled wells online and transport more gas to buyers. But that backlog of drilled wells is shrinking, the report says, and will likely vanish by early next year.
