Near-Normal US Temperatures Weigh on Natural Gas Prices
Natural gas prices fell sharply in early August as forecasts for near-normal temperatures across the central and eastern United States reduced demand for air conditioning. The Commodity Weather Group reported that cooler-than-expected conditions are expected to persist through mid-August, which is bearish for natural gas consumption. In addition to weather concerns, a potential El Niño system could bring warmer fall and winter temperatures in the Northern Hemisphere, further reducing heating-related demand. Despite rising U.S. dry gas production—up 3.7% year-over-year—and increased LNG exports, these supply-side pressures are weighing on prices. However, electricity generation from natural gas rose by 2.0% week-over-week as of July 18. Natural gas storage levels in the U.S. were reported at +6.4% above their five-year seasonal average and down slightly year-over-year (-0.6%). European gas storage stood at 55%, below its historical average for this time of year.
Topics: energy market natural gas weather impact