U.S. natural gas wobbles below 20-month peak amid strong demand
On Monday, prices of the fuel jumped 4.3 cents, or 1.47%, after weather reports suggested more heat and high demand for gas-fired power throughout the end of September.
Gas futures have made a dramatic recovery in recent months, rising nearly 50% since hitting a 20-year low of $1.611 in early March, as an unusually warm summer helped trim a supply surplus that was weighing on prices.
Total U.S. natural gas in storage currently stands at 3.551 trillion cubic feet, according to the U.S. Energy Information Administration, 4.0% higher than levels at this time a year ago and 7.5% above the five-year average for this time of year.
Despite the recent rally, gains are likely to remain limited as traders react to the reality that higher summer demand for the commodity is coming to an end.
Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.
But with autumn having started on September 22, power burns to feed air conditioning demand have probably peaked for now, market analysts said.
Market players looked ahead to weekly supply data due on Thursday, which is expected to show a build of approximately 56 billion cubic feet in the week ended September 23.
That compares with a gain of 52 billion cubic feet in the preceding week, 96 billion a year earlier and a five-year average build of 97 billion cubic feet.
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56 vs 97 5yr average. Coming in half as big as 5 yr average. At every given time of the yr and every given weather NG supply/production is tighter and tighter as demand increases. This is why NG will continue to move higher.
Buy The Dip
