US Weather Forecasts Fuel Four-Week High for Natural Gas Prices
Natural gas prices surged to a four-week high on Wednesday as US weather forecasts predicted intensely hot temperatures across the South and West through September 2. This shift in forecasts is expected to boost demand for natural gas from electricity providers to power air conditioning use.
The Commodity Weather Group reported that above-average temperatures are anticipated across the western and southern US, potentially increasing natural gas demand. Additionally, expectations of a smaller-than-normal build in US natural gas storage also contributed to the price increase.
Natural gas prices have been affected by several factors, including a bearish medium-term factor: speculation about a powerful El Niño weather system that could bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing heating demand. However, recent data shows robust supplies, with US natural gas inventories currently 6.7% above their five-year seasonal average.