Forecasts of warmer-than-usual weather over the next several weeks are expected to generate higher demand for air cooling, which helped natural gas prices rise by 2.94% yesterday and settle at 196. The weather forecast encouraged market optimism because rising temperatures usually lead to a greater requirement for electricity generation for cooling purposes, increasing natural gas usage.
Natural gas production is expected to decrease in 2024, falling from 103.8 billion cubic feet per day (bcfd) in 2023 to 103.5 bcfd, according to a forecast by the U.S. Energy Information Administration (EIA).
In the meanwhile, LSEG projects that the Lower 48 states will see average gas consumption of 107.1 bcfd this week, then relaxing to 106.2 bcfd the next week. This represents record highs for natural gas demand. The week of July 5, 2024, U.S. utilities added 65 billion cubic feet of natural gas to storage, exceeding market forecasts and contributing significantly to the country’s natural gas inventory.
With this week’s rise in seasonal storage, stockpiles have increased for 13 weeks, totaling 3,199 Bcf. There is an abundant amount of inventory as they are currently 283 Bcf greater than they were during the same period last year and 504 Bcf over the five-year average.
