Nat-Gas Prices Soar on Hot US Weather Forecasts
Natural gas prices have risen significantly following forecasts of hotter-than-average temperatures in the US for the next few days. The October Nymex natural gas contract (NGV26) closed at a +4.55% gain on Tuesday, reaching a +0.129 price increase. This uptick comes after a week-low in nat-gas prices.
The Commodity Weather Group's forecast shift to above-average temperatures in the South-Central US through October 6 is seen as a contributing factor to this price increase. Additionally, electricity providers are expected to boost demand for natural gas to power increased air conditioning use due to the hotter weather.
US dry gas production on Tuesday reached 112.2 billion cubic feet per day (bcf/day), a +3.1% year-over-year increase according to BNEF. Lower-48 state gas demand was 74.6 bcf/day, up +0.3% from last year.
However, market expectations for a 'Super El Niño' to bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter may reduce heating demand for natural gas in the long term. The US Energy Information Administration (EIA) projects that nat-gas storage levels will swell to 3,985 bcf by the end of October, a 5% increase above the five-year average.