Natural gas futures have reached a 13-year high with higher temperatures set to occur next week combined with lower production levels.
On Monday, Henry Hub’s natural gas futures rose nearly 10% in a 13-year high.
At 5 p.m. EST, Henry Hub prices for July contracts stood at $ 9,368, up 9.91%. August contracts were $ 9,350, up 9.87%.
One of the key reasons for the sudden rise is heat, with temperatures expected to rise significantly by the middle of this month, with declining production and demand threatening to exceed supply.
Natural Gas Intelligence (NGI) quoted EBW analyst Eli Rubin as saying in a note to customers that a “hot, intense summer” is the first and foremost of fears. Rubin said growing demand for natural gas for refrigeration in the coming weeks “could ignite another substantial increase in Nymex futures in mid-summer.”
Texas, in particular, is expected to increase demand for natural gas to a record high this week, even before the hottest part of summer arrives.
It also boosts natural gas futures, rising demand, declining production and rising liquefied natural gas (LNG) exports from the U.S. Gulf Coast, diverting domestic supplies .
In its 2022 projections released in late May, the Federal Energy Regulatory Commission (FERC) projected that U.S. demand for natural gas would exceed supply this summer. According to NGI, the FERC is seeing an increase in US dry natural gas production by 3.4% during the summer months, compared to a projected 4.8% increase in consumption during the same period.
During the winter period from November 2021 to March 2022, 2.264 billion cubic feet of natural gas were removed from U.S. storage, according to the Energy Information Administration (EIA). This withdrawal is 10% higher than the average of the previous five years. As early as this winter, US demand for natural gas exceeded supply by 14.9 billion cubic feet per day.
By Tom Kool for Oilprice.com
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