Natural Gas Futures Soar

​Natural gas futures soar above $3.40 following the lastest EIA inventory report showing tight storage numbers. This comes in conjunction with increased heat in parts of the US this last week and also technical factors that are driving the market higher.

Heatwave

The Pacific Northwest braces for a heatwave as and hotter weather begins to expand across more of the country. Forecast suggest that there could be record-breaking temperatures in the Pacific Northwest and across the border in Canada. Even though we are still a few weeks away from mid summer, there have been some early heatwave temeratures already and this is driving the Nymex gas prices higher and building momentum as prices comfortably clear the $3.00 level. NGI’s Spot Gas National Avg. climbed 5.5 cents to $3.150.

Triple-digit temperatures are expected throughout parts of Oregon and Washington. Portland could crack the mercury at the 110-degree mark. Seattle, which is expected to top 100, could experience temperatures around 30 to 40 degrees above normal and challenge daily record highs. The dangerous heat is forecast to peak from Saturday through Monday as high pressure settles in and enables temperatures to climb to new heights, according to AccuWeather.

Average highs in June can be anywhere from the 70s in eastern Washington and Oregon to the 80s in western areas into Idaho. The all-time record high of 118 degrees may be approached in Washington Sunday and Monday, according to AccuWeather. Oregon can also reach its own all-time record of 117.

Storage Data

The Energy Information Administration (EIA) reported a modest 55 Bcf injection into storage. This figure was well below historical levels, coming in 60 Bcf below last year’s injection and 28 Bcf below the five-year average. This suggests a tight supply/demand balance which has been expected, but it remains to be seen just how tight this can get throught he summer.

Other factors to consider are higher wind and nuclear power output and it is expected that these will increase in the weeks ahead which may dampen demand for natural gas and ease the tight storage situation. Indeed, in the last week, wind power generation has been very low coming in at 11.8GWh lower than the same week last year. In conjuntion with the total US power load increasing 11% year on year, which is one of the highest totals for mid-June in more than a decade, its no surpise to see naturage gas demand increasing. However, with this said, it is still unclear as to whether next week's numbers show tigher storage thta will fuel the rally in prices.