Tight

April natural gas futures kept to a tight 15.5-cent range Tuesday before closing 9 cents higher at $9.419 as traders mulled supply concerns, weather uncertainties and the potential impact of a U.S. economic recession.

After years of tight supply/demand balances, high prices and escalating production costs, the North American natural gas market has fallen into a “permanent shortage” mentality not seen for at least 30 years, but the market is actually showing signs of achievement as it transforms itself once again, Pace Global Energy Services said in a report.

After years of tight supply/demand balances, high prices and escalating production costs, the North American natural gas market has fallen into a “permanent shortage” mentality not seen for at least 30 years, but the market is actually showing signs of achievement as it transforms itself once again, Pace Global Energy Services said in a report.

Unconventional natural gas resources — coalbed methane, gas shale and tight sandstone — have buoyed North American production, but on the downside, production per well is lower, thus raising unit costs, which means that continued higher gas prices are needed to maintain output on a flat trajectory, according to a joint study by energy consultants Cambridge Energy Research Associates (CERA) and IHS.

Unconventional natural gas resources — coalbed methane, gas shale and tight sandstone — have buoyed North American production, but on the downside, production per well is lower, thus raising unit costs, which means that continued higher gas prices are needed to maintain output on a flat trajectory, according to a joint study by energy consultants Cambridge Energy Research Associates (CERA) and IHS.

June natural gas futures traded in an extremely tight 12-cent range Wednesday, further highlighting the market’s recent directionless pattern. Trading between $7.610 to $7.730, the prompt month ended up closing 8.3 cents higher at $7.720, breaking the week’s two-day string of lower closes.

October natural gas futures traded within a fairly tight 17-cent range Tuesday as the expiring prompt month continued to feel out two-year-old support around the $4.500 level. One day ahead of going off of the board, the contract put in a low of $4.380 before closing at $4.526, up 5.1 cents on the day.

With tight U.S. energy markets keeping prices at historically high levels, “several storm clouds are on the horizon” for the industry unless the supply burden is eased, according to former U.S. Secretary of Energy Spencer Abraham. He noted that another spike in energy prices could bring a backlash from the general public, which in turn could spark U.S. government intervention.

With tight U.S. energy markets keeping prices at historically high levels, “several storm clouds are on the horizon” for the industry unless the supply burden is eased, according to former U.S. Secretary of Energy Spencer Abraham. He noted that another spike in energy prices could bring a backlash from the general public, which in turn could spark U.S. government intervention.