Natural Gas Prices Rise Due to Smaller-Than-Anticipated Storage Build
Natural gas prices rose in early August as the latest EIA report showed a smaller-than-expected increase of 28 billion cubic feet (bcf) in U.S. natural gas storage for the week ending July 24, below forecasts of +37 bcf but above the five-year average. The modest build supported prices amid expectations of warmer weather across much of the western United States through August 13, which could increase demand from electricity providers using natural gas to power air conditioning systems. Despite recent cooler temperatures that had reduced demand and allowed storage levels to rise, forecasts for a potential El Niño system in fall and winter remain bearish due to expected warmer weather. U.S. dry gas production reached 112.4 bcf/day on July 30, up year-over-year by nearly 3%, while electricity output rose slightly during the week ending July 18. Natural gas prices had previously hit a three-month low earlier in the week due to reduced demand and strong storage gains but rebounded as weather forecasts shifted warmer. Storage levels were reported at +6.4% above their five-year seasonal average, indicating adequate supply conditions.
Topics: energy market movement weather impact