Natural Gas Prices Rise Due to Smaller-Than-Anticipated Storage Build
Natural gas prices rose slightly in early October as the U.S. Energy Information Administration (EIA) reported a smaller-than-expected increase of 44 billion cubic feet (bcf) in natural gas storage for the week ending September 11, below forecasts of +48 bcf and well under the five-year average of +74 bcf. The lower build suggests tighter supply than anticipated, supporting prices despite cooler weather forecasts that could reduce demand from power generators. European natural gas prices surged to a 3.75-year high earlier in the week due to reduced Middle East supplies caused by the closure of the Strait of Hormuz amid U.S.-Iran tensions, which has kept European storage levels below normal and boosted support for U.S. prices. However, long-term bearish factors include forecasts of a 'Super El Niño' that could bring warmer temperatures in winter, reducing heating demand. U.S. dry gas production rose to 113.2 bcf/day year-over-year, while electricity output increased sharply by +16.1% for the week ending September 12 due to higher power generation.
