Natural Gas Prices on the Rise, Challenging 'Cheap' Label

Wednesday, 27 Mar 2013 | 11:27 AM ET
Getty Images

Those "cheap" natural gas prices everyone keeps talking about? They may not stay that way much longer.

Until late last year, natural gas prices had been on a steep downward curve. Yet on Wednesday, nat gas futures prices hit an intraday high of $4.078, touching their highest level since Sept. 15, 2011.

It's on track for its fourth-consecutive quarterly gain—and its best since the second quarter of 2012, when it rose 32.8 percent. Before then, nat gas had posted three quarters of double-digit losses, bottoming last year at 10-year lows.

Since nat gas traded at $1.90 last April, prices have more than doubled—skyrocketing by 113 percent.

The futures prices for nat gas are currently trading 24 percent above the 200-day moving average, which stands at $3.25.

Natural Gas Inventories Down 62 BCF
CNBC's Sharon Epperson breaks down the latest numbers on natural gas supplies.

The trend is significant, given the role that natural gas has played in the U.S. energy comeback.

Natural gas is cheap and abundant, yet consumers have been slow to warm to it as an alternative to conventional gas. Additionally, its price is notoriously volatile: Earlier this year, prices had taken an unexpected downcurve that sent analysts scurrying to revise their forecasts.

Weather may also be playing a role in the unexpected surge. Winter has lingered longer than expected, creating more demand for gas and heating fuel.

In a recent research report, Goldman Sachs forecast natural gas prices to top out at $4.25 within 12 months.


  • Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom, March 23, 2014 near McKittrick, California.

    Brent crude futures turned lower after Russia said top diplomats have agreed to take immediate steps toward calming tensions in Ukraine.

  • An employee wipes a TV screen in a shop in Moscow, on April 17, 2014, during the broadcast of President Vladimir Putin's televised question and answer session with the nation.

    Russian President Vladimir Putin warned of possible disruption to Europe's gas supply on Thursday, as the U.S. confirmed it would send additional military support to Ukraine.

  • A former BP employee will pay to settle allegations of insider-trading during the 2010 Deepwater Horizon oil spill.

  • Pro-Russian activists seized the main administration building in the eastern Ukrainian city of Donetsk.

    Deadly clashes in eastern Ukraine have spiked fears of all-out war in the region. So who are the armed, flag-waving rebels who appear to be behind it all?

Contact Energy


    Get the best of CNBC in your inbox

    › Learn More