U.S. natural gas prices jumped last week and early on Monday amid a tight natural gas market and expectations of high demand for electricity in hotter than usual weather in many parts of the United States.
As of 8:19 a.m. EDT on Monday, the U.S. benchmark natural gas price at the Henry Hub was trading at above $3.50 per million British thermal units (MMBtu)—at $3.549, up by 1.52 percent. This was the highest price for the prompt futures in 29 months.
On Thursday last week, the Energy Information Administration (EIA) reported net injections into storage of 55 billion cubic feet (Bcf) for the week ending June 18, lower than analysts had expected. The median estimate was 62 Bcf injection into storage of natural gas stocks. The lower-than-expected stockpiles of natural gas signaled a tighter market just as the Pacific Northwest is scorching in a heatwave and high temperatures are expected to continue into July in many parts of the U.S.
While power demand is surging in the heat waves, working natural gas stocks totaled 2,482 Bcf in the United States as of June 18, which is 17 percent lower than the year-ago level and 6 percent lower than the five-year average for this week, the EIA said on Thursday.
During the same week last year, net injections into gas storage were more than double – 115 Bcf – the injection for the week to June 18. The average rate of injections into storage is 15 percent lower than the five-year average so far in the refill season, April through October, the EIA has estimated.
Amid this tight market, demand is expected to stay high at least until July 1, according to NatGasWeather.com. Very hot weather in the Pacific Northwest and hot high pressure in the West into Texas sent temperatures in the high 90s to the 110s in the weekend, including all-time record-breaking heat in Seattle and Portland.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Reuters: U.S. Agrees To Lift Iran Oil Sanctions
- Can The Middle East Survive Without Oil?
- Solar Has An Unlikely New Enemy