The weather is going to be hot after all in the short term, forecasts now predict. That prediction sent natural gas prices soaring on Monday by nearly 20 percent as traders hold out hope for anything that will contribute to a reduction in nat gas stockpiles.
Natural gas prices have been trading under $2.50 since December on weak demand and oversupply.
Other bullish factors on Monday highlight the increased LNG/feedgas export figures provided over the weekend, with Genscape estimating a 740 MMcf/d increase on Saturday.
Natural gas prices were trending lower at the end of last week, as Hurricane ISAAIS was expected to bring cooler weather to most of the Gulf of Mexico.
Gas still has an oversupply problem, of course, and traders are still hoping that natural gas inventories will draw down soon—the call for warmer weather is part of that wishful thinking, sending natural gas prices up at least for now.
But this shorter-term warmer weather doesn’t mean a major heatwave that would send the demand for natural gas soaring.
Other bullish signals for nat gas include the cancelation of the Atlantic Coast nat gas pipeline, but Warren Buffett’s Berkshire Hathaway has snapped up that nat gas asset and more, despite some analyst’s call for nat gas to go the way of coal, as the bridge fuel just isn’t clean enough for the renewable crowd to buy into.
Natural gas plunged to a 25-year low in June, as demand for nat gas plunged on the milder temperatures, and the world remained awash with the fuel.
At 1:52 pm EDT, natural gas prices had risen 17.68% to $2.113, the first time it has been above $2 since May—and that was just for a day or two. Nat gas prices have not sat comfortably above $2 since December.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More