US Nat-Gas Prices Rebound as European Gas Prices Plummet
Nat-gas prices retreated from their one-week high on Wednesday after European nat-gas prices fell to a one-week low. The drop in European prices led to long liquidation in US nat-gas futures, causing Nat-Gas Prices Slip as European Gas Prices Retreat - inkl October Nymex natural gas (NGV26) to close down 0.028 (-0.96%) on Wednesday. Initially, nat-gas prices rose due to the outlook for above-average US temperatures, which would increase demand from electricity providers as air conditioning use is expected to rise. The Commodity Weather Group predicted that temperatures will remain high across the South and Southeast through September 25.
The consensus forecast for Thursday's weekly EIA nat-gas inventories suggests a smaller-than-normal build of +48 bcf, well below the five-year average of +74 bcf. This could provide support to nat-gas prices. However, European nat-gas is experiencing high prices due to sharply reduced supplies from the Middle East, which are keeping storage levels below normal ahead of winter.
A potential bearish factor for nat-gas prices is the market's expectation of a 'Super El Niño' that will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand. US lower-48 dry gas production rose 4.0% y/y to 112.3 bcf/day on Wednesday, while lower-48 state gas demand increased by 2.4% y/y to 76.3 bcf/day.