How much has COVID-19 affected natural gas prices?
Thursday, June 11, 2020
Natural gas prices have suffered due to disrupted demand caused by the global economic shutdown brought on by COVID-19, according to Investment U.
U.S. natural gas consumption is expected to decrease 3.9% year-over-year to 81.9 billion cubic feet per day in 2020, according to the Energy Information Administration. One of the reasons for this drop is a 7.1% decrease in the industrial sector caused by lower manufacturing activity amid stay-at-home orders.
If current predictions hold true, 202 will be the first year in over a decade that demand for natural gas has declined. Typically, producers have seen natural gas demand grow more than 3% annually.
In the current market, prices are also being impacted by increasing volumes of stored natural gas. At the end of April, 2.3 trillion cubic feet of natural gas was being stored, which was 20% higher than the five-year average. Storage is projected to reach 4.2 trillion cubic feet by the end of October, which would be a record.
Learn more: Investment U > Has COVID-19 been good or bad for natural gas?
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How often do royalty payments come?
Depending on the company, royalty payments can arrive monthly or quarterly.
Are my royalty payments transferable?
Yes. If you plan on selling your property, notify the gas company that is leasing your land and your realtor. They will make arrangements to allow the royalty payments to transfer to a different land owner.
What are royalties?
Royalties are payments from the gas company to the landowner as part of a lease agreement. Royalties payments cannot begin until production begins. The payments are dependent upon the market price of the resource.