Natural Gas up Nearly 10% As LNG Exports Surge
Natural gas futures in the United States are bearish and breaking free from seven weeks of low prices.
Quick overview
- LNG exports from the United States have surged, pushing natural gas prices to $4.3/MMBtu after a recent low.
- Natural gas prices have increased by 9.45% in a day due to optimistic LNG outflow reports, despite warmer temperatures potentially dampening demand.
- Inventory levels are above the five-year average, but winter demand is expected to outpace production, leading to anticipated price increases.
- Forecasters predict a cold winter ahead, which could further drive up natural gas prices despite current warm weather conditions.
LNG plants in the United States recorded close to record levels of exports, pushing natural gas prices to $4.3/MMBtu after the price had dropped to its lowest point in seven weeks.
Optimistic reports of LNG outflows spurred gas prices in the United States with an increase to 18.5 bcfd by December 23rd. Already, November’s record has been broken, and analysts expect LNG exports to continue to grow through the coming months.
Natural gas prices in the United States are now up by 9.45% for the day and rising on the overwhelmingly positive sentiment. Prices may be kept in check, however, by the warmer temperatures this week that will hold back demand during a period when demand is typically very high.
High Inventory Fights against Winter Robust Demand
Natural gas futures for the United States should continue to rise but not as high as they would have if the inventory levels were lower. Inventory reports show levels above the five-year average and yet demand through the winter season is expected to outpace production. Those inventory levels will be dropping but not as low as they usually are for this time of year.
Winter weather should bring with it plenty of demand for natural gas, though, as cold weather is expected to dominate the United States in January. Anticipation for that rising demand is part of why gas prices are so high, and any further weather updates that include even more cold weather should spike the price further.
On Tuesday, natural gas futures rose to November highs and could still climb higher. Through the winter season, we expect prices to rise further, especially as inventory numbers dwindle and demand increases. Another warm spell, however, may tank the prices temporarily, but forecasters anticipate a cold winter to set in immediately after the current warmer temperatures disappear.
The bullish trend for gas futures is hindered by warm weather for now, but forecasters do not expect that to last, and cold weather coming in from Canada and the northern United States should quickly raise prices in the next few weeks. This winter is off to a slow start, but investors should anticipate rising prices through January.
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