Nat-Gas Prices Plummet on Surging Inventories and El Niño Fears
Natural gas prices fell on Thursday due to a larger-than-expected increase in US inventories, according to data from the Energy Information Administration (EIA). The +36 bcf rise in natural gas inventories was higher than market expectations of +31 bcf. Despite this bearish factor, warm forecasts are expected to boost demand for natural gas from utilities to meet increased air-conditioning needs.
Commodity Weather Group is forecasting above-average temperatures across the South and Southeast through August 22, while Vaisala expects above-normal temperatures in the West from August 22-26. However, a bearish medium-term factor for natural gas prices is speculation about a powerful El Niño weather system that may bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter.
US dry gas production on Thursday was 113.5 bcf/day, up +4.4% year-over-year, according to BNEF. Lower-48 state gas demand was 83.1 bcf/day, down -0.5% year-over-year. Estimated LNG net flows to US LNG export terminals were 17.9 bcf/day, down -1.8% week-over-week.