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Yes, and: natural gas is a byproduct of oil production. For decades, natural gas was flared off as an unwanted byproduct. It is still flared off today when it'
by i_am_proteus 4y ago
Yes, and: natural gas is a byproduct of oil production. For decades, natural gas was flared off as an unwanted byproduct. It is still flared off today when it's uneconomical to capture it.
Unlike other goods where supply will drop if there is insufficient demand, a lot of natural gas gets produced regardless due to oil production. It gets sent to market because there is no local storage capacity and the alternative would be to flare it off.
Shenanigans in the futures market aside, this contributes to (temporary) oversupply driving prices negative.
The same warehousing phenomena result in this negative price probably not lasting very long. Barring an extremely warm next few weeks, expect the price to be back up soon.