The U.S. Energy Information Administration released its weekly natural gas storage report for the week ending January 16, 2015, and the withdrawal was less than the consensus estimates by analysts.
The withdrawal was -216 bcf in comparison to analysts’ estimates of -228 bcf. The less than expected withdrawals again heightened concern about over supply in the natural gas market.
Prices of natural gas futures dropped immediately following the report, losing $0.17 by mid-day from its opening price of $2.97. $2.80 is a critical support level for natural gas futures prices having been tested previously in periods of decline.
The recent decline in natural gas puts the fossil fuel in focus for many energy plants. The low natural gas prices make the fuel largely competitive with coal. Since natural gas is cleaner for the environment, any energy plants that switch from coal to natural gas could increase demand for the fossil fuel.
However, such switching of coal to natural gas is likely to only occur if sustained coal fuels heating demand.
billion cubic feet (Bcf)
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