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Cold weather pushes natural gas prices up

BY JACK MONEY Modified: December 17, 2008 at 5:07 am •  Published: December 17, 2008
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It’s not winter for nearly another week.

But cold weather is pushing natural gas prices higher — at least for now, a local analyst said Tuesday.

The ultimate key to keeping them higher, said Tony Say, president of Clearwater Enterprises in Oklahoma City, will be reduced drilling and production.

According to Inside the Federal Energy Regulatory Commission’s Gas Market Report, prices for natural gas producers in Oklahoma have been brutal the past few months, staying below $5 a thousand cubic feet until this week.

In November, prices slumped, falling below $3 for a time.

The problem? An over-supply of natural gas caused by huge numbers of newly drilled wells, including many in unconventional shale fields known for prolific natural gas production, Say said.

Cold weather will help during the next month or so, he said.

"We are supposed to get another cold blast this weekend, and then another one after that,” Say said. "So, I expect prices to go a lot higher in the next few days.”

Long-term, an improved economy would help.

But Tuesday, Say expected that might take a year or longer to happen.

"I think where you are going to see gas volumes affected the most is through a decrease in drilling because of low prices,” he said. "Low prices are the cure for low prices.

"Once the drilling slow-down is realized and the excess volumes are taken off the market, you will see prices moving back up again. ... I see it happening in the third or fourth quarter of 2009.”