Natural Gas Prices Now below 50-Day Moving Average
The supply of natural gas remains high while the weather is armer thane expected, leading to low priced natural gas futures.
Quick overview
- Natural gas prices have dropped to $3.82 USD/MMBtu, below the 50-day moving average due to strong production and warm weather.
- Overproduction and steady demand have kept natural gas prices lower than normal for this time of year.
- Despite expectations of colder weather, warm conditions persist, leading to high production levels and ample supply.
- Current forecasts suggest continued warm weather through November, which may prevent significant price increases for natural gas.
The price of natural gas has dropped this week and is now at $3.82 USD/MMBtu, which is below the 50-day moving average of $3.875 due to strong production levels and warm weather.
Overproduction has been a serious issue of concern for the gas futures market all year long, and gas prices are still lower than normal for this time of year. The United States has experienced unseasonably warm weather and has enjoyed high production levels for natural gas.
Crude oil overall is up 0.89%, and Brent crude oil is up by 0.71%, although natural gas is down 1.11% for the day. With massive injections of fuel being made regularly into the current supply and little demand for gas to meet heating needs, the market is expected to see low prices for now.
Colder Weekend Expectations Fail
Last weekend was expected to be a bit colder than in recent weeks, but that expected model failed, and warm weather prevailed. Active gas rigs are operating at a very high capacity, and it does not look like there is any indication that they will slow down.
Baker Hughes reported that the 121 rigs that were operating last week are still operating this week. With no change there, we can anticipate that the current supply of natural gas will simply grow in the coming weeks. With winter coming on though, demand for natural gas will automatically increase. However, if this proves to be an unusually warm winter, then the abundant supply of natural gas will keep prices lower than normal.
Storage figures show that there is ample supply of natural gas to meet needs now and through the winter, with an EIA report from last week revealing a greater Bcf injection than expected (+87 compared to an expected +83). Inventories are full and are about 4.5% higher than they normally would be at this time of year. That is in the United States, anyway, and the inventory levels are lower in the European Union. There, inventory is reported at about 83% compared to normal levels for this time of year.
Current forecasts predict warm weather will continue through November in the United States, keeping supply high and demand low. That will have to change for the natural gas prices to rise, and even if they do increase in December and January, the bump made by cold weather might not be as high as normal.
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