Southern Heat Wave Boosts Gas Demand
Natural gas futures rallied in early trading due to strong demand and limited supply. However, the key factor that will confirm the current price trend is the upcoming storage numbers.
The southern heat wave is doing significant damage to gas storage levels. The ridge over the south-central U.S. and Lower Mississippi Valley is not moving, with temperatures in the upper 90s and low 100s expected through mid-week. This has led to increased power burn as air conditioners run continuously, even at night.
The GFS model is running hotter than the European counterpart, especially across the South. If this solution holds, power burn will remain elevated into next week, delaying the expected cooling degree day fade. A few extra Bcf per day of demand can shrink a storage build faster than traders anticipate.