Contributed by Todd Crawford
Most forecasts are calling for a record El Nino this winter, and traditionally that has meant warmer temperatures, lower heating demand, and thus lower natural gas prices in the U.S. At this point, WSIsuggests that the current El Nino event will be the strongest since at least 1997, and potentially the strongest in recorded history. While we may have another warm El Nino winter, the impact on natural gas prices may be less substantial than it used to be due to changes in market fundamentals.
Beginning about 8 or 9 years ago, energy producers began drilling for natural gas in the shale rock formations that are found across parts of the Appalachian and Ozark Mountains and up into the Dakotas. The vast reservoirs of gas tapped into during this process (the “shale gas revolution”) have changed the US energy landscape for the better, with increased supply and thus lower prices for residential and commercial entities.