Falling U.S. gas price strongly driven by speculation

The decline in natural gas exploration activity in the US - the gas rig count dropped recently to around 190, its lowest level in at least 25 years - has evidently been unable so far to halt the rise in production. The latest US gas production data from July showed a record production level. 

Even though the increase in US gas stocks fell in some cases significantly short of expectations in recent weeks, the US gas price has continued to decline. 

"We believe that one reason for this is the fact that gas stocks increased to a record level in the so-called producing region in the US south. Furthermore, speculators are likely to have played a major part in the price fall. Their net short positions climbed to their highest level since September 2008 last week", states Commerzbank. 

The extreme pessimism displayed by investors threatens to result in a massive short-term price recovery, especially if the upcoming heating season in the US entails particularly high demand. New figures showing drilling activity in the US oil and gas sectors will be published this evening, added Commerzbank.