Widespread heat that has lingered well into the beginning of the traditional fall shoulder season has kept natural gas prices propped up and sent nearby futures to 20-month highs. After not surpassing the psychologically-important $3 level for well more than a year, the prompt-month NYMEX natural gas market breached this benchmark in mid-September on the back of an unseasonable cooling load in populous markets in the eastern half of the country. What had already been a record season for natural gas usage from the power generation sector was extended into the beginning of fall, with summer-like temperatures forecast across most of the country through at least early October.
The supportive weather, along with other bullish elements of the fundamental balance, has altered market participants&rsquo; views of the coming winter as well. A year ago, production growth still was relatively strong and storage inventories were on track to enter the winter season at record levels. While inventories today remain historically strong, it appears a foregone conclusion that the end-of-summer storage peak will fall shy of the 2015 record. Meanwhile, exports have shown significant year-on-year growth and domestic production has shown declines since the first quarter. As a result, average NYMEX pricing for the coming winter sits near $3.30 per MMBtu, compared to winter 2015-'16 prices 12 months ago well south of $3 per MMBtu.
Forecasts for the winter are mixed, and it remains too early to draw any firm conclusions about the extent of heating load. However, it is a safe assumption that demand will be higher than the historically-mild 2015-&lsquo;16 season. This has contributed to expectations for strong storage withdrawals that could potentially leave inventories near the lower end of the five-year range as the market enters the 2017 injection season.&nbsp;
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LOCATION
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21-Sep-16
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24-Aug-16
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22-Sep-15
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NYMEX
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$3.057
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$2.749
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$2.577
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NNG Ventura
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$3.015
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$2.560
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$2.615
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Calif. Citygate
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$3.090
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$2.765
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$2.885
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Widespread heat that has lingered well into the beginning of the traditional fall shoulder season has kept natural gas prices propped up and sent nearby futures to 20-month highs.

Long, hot summer buoys natural gas prices

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