Nat-Gas Prices Bounce on Smaller Storage Build Expectations

Natural gas prices rebounded on Wednesday after initially dipping due to forecasts for seasonal US weather that could limit demand. The consensus is now for a smaller-than-average build in weekly gas storage, with Thursday's EIA report expected to show a +63 bcf increase, below the 5-year average of +80 bcf.

The Commodity Weather Group predicted normal seasonal weather across the eastern and southern US from October 5-14, which could temper demand. However, US dry gas production was up 1.3% year-over-year to 110.4 bcf/day, while lower-48 state gas demand increased by 0.6% y/y to 71.6 bcf/day.

A bearish medium-term factor for nat-gas prices is the market's expectation of a 'Super El Niño' that could bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand.