Nat-Gas Prices Surge Amid Warm Forecasts, Robust Supplies
Natural gas prices closed higher on Wednesday, as warm forecasts for the Midwest and South continued to drive up demand. According to Vaisala, temperatures in those regions will remain hotter-than-average from August 17-21. This is despite some bearish factors, including a projected increase in US natural gas storage levels by the end of October. The US Energy Information Administration (EIA) forecast that inventories will swell to 3,985 billion cubic feet (bcf), the highest level in 10 years and 5% above the five-year average.
US natural gas supplies are currently robust, with inventories +6.7% above their 5-year seasonal average. This is due in part to a recent announcement by Energy Transfer that the Hugh Brinson pipeline will operate at its full capacity of 1.5 billion cubic feet per day (bcf/day) by September 1.
However, some analysts are warning about a potential drop in demand due to speculation about an El Niño weather system bringing warmer-than-normal temperatures to the Northern Hemisphere this fall and winter. This could reduce natural gas heating demand.