Natural Gas Prices Rise Due to Pre-Weekend Short Covering
On September 18, natural gas prices rebounded from a one-week low as traders engaged in pre-weekend short covering. The Nymex October contract (NGV26) closed up by +0.38%. Initially, prices dipped due to forecasts of cooler U.S. weather reducing demand for electricity generation via air conditioning. European natural gas prices surged to a 3.75-year high amid reduced Middle East supplies caused by the Strait of Hormuz closure from US-Iran tensions. This has kept European storage levels below normal and boosted potential demand for U.S. exports ahead of winter. However, long-term bearish factors include expected warmer temperatures due to an El Niño event reducing heating needs. U.S. dry gas production rose 4.9% year-over-year to 113.8 bcf/day in early September while electricity output increased sharply by +16.1%. Despite this, the EIA forecasts record-high U.S. storage levels at the end of October and raised its 2027 production estimate.
Tickers: $JPM
Topics: energy market natural gas short covering weather impact