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Natural gas might be the most talked about commodity lately. Everyone from Jeffrey Gundlach to Wilbur Ross are extremely bullish on the fossil fuel.However, prices continue to trade near historic lows. In a recent note to clients, Morgan Stanley analysts say they don’t expect prices to go much higher this year.
Business Insider reached out to the U.S. Energy Information Administration to better understand what could get prices moving.
According to a 2006 report from the Oil and Natural Gas Journal, hurricanes in the Gulf of Mexico cause substantial damage to gas processing and pipeline facilities.
'It will take the industry several years to recover from the disruptions, and some lost production will never be recovered.'
And indeed, prices did not recover until the Great Recession.
In a January 2006 brief about a 10 per cent surge in prices, UPI reported, 'Analysts appeared stumped by the sudden surge in a commodity that is well supplied within the United States.'
A year later, Congress was holding hearings about excessive speculation in the markets.
'In 2006, January futures contract prices skyrocketed, exceeding October prices by $4, more than twice the historic norm,' Sen. Carl Levin said in his opening statement. 'This price difference is the largest between these two contracts in five years.'
While pre-Great Recession rampant speculation appears to have been curbed, one cannot ever say it's been eliminated.
According to EIA analyst Amy Sweeney, swings in hot and cold temperatures produce coincidental swings in natgas prices.
The EIA's Sweeney also said accidents and unscheduled pipe maintenance causes markets to freak out.
Unlike oil, which is a global commodity natural gas remains subject to local weather patterns. When tornadoes in Alabama required a nuclear plant there to shutdown, prices spiked.