Natural Gas Prices Moving Higher

Since the first of the month natural gas prices have been on the increase.  Southern Star Central daily index posted price for June 8th was $2.135 per MMBtu, up twenty-three cents from the posted price of $1.905 on June 1st.  Enable Gas Transmission daily index is also on the rise as prices are up 17.5 cents since the first of the month.

Why are we seeing a jump in prices?

Even though natural gas storage levels remain elevated, the supply glut is slowing compared to analysts’ expectations. The first week of April, inventories were 63% above the 5-year average.  The first week of June that surplus shrank to 35% above the 5-year average.

US natural gas production is declining and is expected to fall about 1 Bcf/d day-on-day according to Bentek.  Natural gas rig count fell by five for the week ending June 3rd.  The rig count has dropped 63 percent year-over-year.

Forecasters are predicting a very warm summer, which will increase natural gas fired electric generation.  NOAA is projecting a 70% chance for LA Nina to hit by fall, meaning a much cooler winter season.

A tighter supply-demand balance can provide a boost to prompt month prices as they continue to hover at a sustained level not seen since the end of January.  Experts in the industry are projecting gas prices could reach the $3.00 mark by year end.