Natural gas prices spiked on Friday by nearly 9%, even as the weekly storage report showed little movement.
Natural gas prices hit $2.367 by 2:26 pm EDT, an increase of 8.48% or $0.185, even as the EIA's weekly storage report a day earlier showed a small increase of 58 Bcf in working gas in storage. The market had anticipated a larger build.
Also bullish for natural gas on Friday were forecasts for hot weather and reports of increased LNG exports.
Front-month natural gas futures on Friday hit their highest since the end of last year on this data as air conditioning usage is expected to increase as people try to cope with the heat wave. This will increase the demand for natural gas.
This will be particularly true in Texas, where demand for power in general-and consequently natural gas-is expected to hit a record high today as the heatwave sets in, according to Reuters.
These record highs for power demand will come even as industrial activity has not yet returned to pre-pandemic levels.
This unprecedented power demand has led to increases in power prices in the western part of the United States, which has, in turn, boosted natural gas prices.
Front-month nat gas futures were up more than $0.15 to $2.335 on Friday afternoon.
LNG exports have also increased, with improved demand outlook over the next couple of weeks, although the EIA stated that U.S. LNG exports will remain at low levels for the remainder of the summer, with planned cargoes of LNG still being canceled. According to EIA data cited by Kallinish, 46 LNG cargoes were canceled in June, 50 canceled in July, 45 were canceled in August, and so far 30 have been canceled for September.
By Julianne Geiger for Oilprice.com
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