Natural Gas is Capturing Coal Market Share in Power Generation, as Predicted

Oil & Natural Gas / Gas Shales / Economics

Date posted: 05/03/15

Gordon Kristopher reports that natural gas price decreased sharply to record levels on massive inventory data released by EIA recently. Also, natural gas consumption by electric power plants surged by 11 per cent in 2015, compared to 2014, according to data from LCI Energy. There seems to be an increase in power plants switching from coal to natural gas for electrical power generation. Lower natural gas prices are driving the switch. This will increase the demand for natural gas in 2015. According to EIA (U.S. Energy Information Administration) estimates, dry natural gas will be the largest contributor to electrical power generation by 2040. It will have a share of 34 per cent. Industry estimates from Capital Economics suggest that old coal plants may have to be closed. The renewed demand for gas might push natural gas prices to 4 dollars per MMBtu by the end of 2015 and higher as the industry learns to control distribution, as predicted. Natural gas prices are currently trading below their 20, 50, and 100-day moving average as of April 23, 2015. The symmetrical pattern and downward channel suggest that prices could trade between levels of 2.40 dollars per MMBtu and 2.70 dollars per MMBtu in the short term. The long-term trend for natural gas is still considered bearish my market makers but bullish by pragmatists.