On Wednesday, natural gas prices plummeted amid stronger production from a Permian Basin, while inflation data showed food and rent rose.
Gas futures for July delivery went down by -0.30% to $2.33 per metric million British thermal units on June 14.
According to the Energy Information Administration, production in the Permian Basin will climb again this year. They said its volumes are on their way to a new record.
Analysts said the recent decline in the rig count matches their forecast that producers will continue responding to low prices. This would be done by cutting investment.
In addition, production in the basin kept growing this year, topping the 21.00 billion cubic feet 2022 average. Most of the output in the Permian is a by-product of oil making. Besides, gas production rises when oil production gets higher.
Moreover, inflation data from the US shows that dropping gas prices in the South left positive feelings in residents. It is considered a relief to them since rent and food have become pricier.
Based on the Labor Department’s consumer price index, energy costs slid by 2.30% the previous month. As a result, gas prices had a 3.60% reduction. In the last 12 months, its cost fell by 22.30% in the region.
European Volatile Week Pulled Down Gas Price
On Tuesday, Europe’s benchmark for gas prices fell for the second day amid slow demand and high inventories.
Last week, European fuel prices were in a volatile state since there were supply outages and hotter weather was experienced.
Industrial fuel demand remained weak despite the lowest gas prices in two years. In the current year, costs eased to levels from before the energy crisis. The setback occurred in 2021 and peaked in 2022 after the Russia-Ukraine war.
However, the cheapest prices witnessed in around two years did not stimulate gas consumption amid slowing European industries and economies. Also, high storage fuel levels compared to the five-year average harm costs.
