While weekly storage injections have been below average, analysts still believe overall inventories will reach near record or record levels by October 31
Temperatures over the past 12 months have been the warmest of the past 117 years. Temperatures for the first 3 months of the storage injection season, which is April through June, have been the warmest of the past 117 years. In addition, this is the warmest start to a July in the past 101 years.
Record heat has driven air conditioning demand higher, and utilities have met this demand through the increased utilization of natural gas-fired electric generation. Rising natural gas demand has pushed natural gas prices higher, but for the first time in history, natural gas prices have remained on equal footing with coal prices for numerous months. Above-normal temperatures aren’t projected to break anytime soon, although as each summer month passes, the extreme heat will begin to dissipate.
The lingering heat has caused analysts to taper back projections for storage inventories. However, what are of great interest are the longer-term outlooks for early winter. According to the National Oceanic and Atmospheric Administration (NOAA), above-normal temperatures are projected to linger into November for the eastern half of the nation. If such a forecast materializes, storage injections would continue into the month of November.
Relative to how Mother Nature is impacting natural gas prices, Valerie Wood, President of Energy Solutions, Inc. in Verona, Wisconsin, stated, “Lingering above-normal temperatures will continue to provide support to natural gas prices. However, the price of Central Appalachian coal is currently around $2.83 per MMBtu, and that means that natural gas price moves over $3 per MMBtu may be difficult to maintain because at that price level, coal-to-natural gas fuel switching by the electric power sector will begin to decline.”
Additional information about natural gas price trends, storage inventories, demand issues, production levels, rig counts, and much more can be found in the Monthly Edition of The Advisor. Take a FREE, no-obligation 60-day trial to The Advisor and receive the most recent Weekly Edition, as well as the Monthly Edition for July, which contains additional insight into bearish, bullish and neutral factors that affect pricing within the Natural Gas Industry. Learn more by visiting www.energysolutionsinc.com.
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About Energy Solutions, Inc.
Formed in 1996, Energy Solutions, Inc. is independently owned. With more than 50 years of experience in the natural gas industry, our team focuses on natural gas prices and in helping businesses improve their internal processes for the purchase of natural gas.