Natural gas futures peaked at a 13-year high at higher temperatures next week, combined with lower production levels.
Henry Hub’s natural gas futures rose nearly 10 percent on Monday to a 13-year high.
At 17:00 EST, Henry Hub’s July contract prices rose to $ 9,368, up 9.91%. August contracts were at $ 9,350, up 9.87%.
The main reason for the sudden jump is the heat, as temperatures are expected to rise significantly in the middle of this month, with production declining and demand threatening to exceed supply.
Natural Gas Intelligence (NGI) quoted EBW analyst Eli Rubin as saying in a note to customers that “extremely hot summer” is at the forefront of fears. Rubin said growing demand for natural gas for cooling in the coming weeks “could cause another significant rise in Nymex futures in mid-summer.”
In particular, Texas is expected to see natural gas demand reach a record high this week – even before the hottest part of summer.
Natural gas futures are also stimulating increased demand, declining production and growing exports of liquefied natural gas (LNG) off the Gulf Coast, diverting domestic supplies.
In its forecast for 2022, published in late May, the Federal Energy Regulatory Commission (FERC) predicts that demand for natural gas in the United States will outpace supply this summer. According to NGI, FERC sees a 3.4% increase in dry natural gas production in the United States during the summer months, compared with a projected 4.8% increase in consumption over the same period.
During the winter period from November 2021 to March 2022, 2,264 billion cubic feet of natural gas were withdrawn from storage in the United States, according to the Energy Information Administration (EIA). This withdrawal is 10% higher than the average for the previous five years. Already this winter, demand for natural gas in the United States exceeded supply by 14.9 billion cubic feet per day.
By Tom Cool for Oilprice.com
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