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During the summer, two things most Americans relate to are higher temperatures and higher natural gas prices. This year, however, happens to be an exception.

During the summer, there are two key factors that control the price of natural gas: the potential for hurricanes in the Gulf of Mexico, and the amount of gas in storage. Luckily, the country hasn't experienced a severe weather event since Tropical Storm Barry opened the hurricane season in June. Natural-gas futures have fallen nearly 13% since the $8 highs last month, down to the $6.75 region, mostly because of the amount of gas already in storage. Paul Flemming, director of power & gas research at Energy Security Analysis told the Wall Street Journal (subscription required) that gas prices could drop $1 if the Gulf can make it through this year's hurricane season unscathed.

Now comes the added new finds from the Independence Hub off the coast of Louisiana, an offshore platform owned by Anadarko Petroleum Corp (NYSE: APC), which is expected to ship 50 million cubic feet of gas daily starting today, and ramp to 1 billion cubic feet -- 1.5% of domestic production -- over the next few months: natural-gas futures are nearly down 3.7%, to $6.48 on the news.

When storage hits capacity, prices tend to drop. Tancred Lidderday, an economist with the Energy Information Administration, believes the market is close to hitting capacity. The EIA reported Thursday there is 2.69 trillion cubic feet of gas in storage, or 16% above the five-year average for storage at this time. The Independence Hub can only improve that storage capacity. With consumption expected to rise 4.3% in 2007 and a modest 1.1% in 2008, it doesn't look like natural gas prices will surge this summer unless a major storm rolls right into the Gulf.

Falling natural gas prices in the summer? originally appeared on BloggingStocks on Fri, 20 Jul 2007 15:30:00 EST. Please see our terms for use of feeds.

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