U.S. Natural Gas Prices Surge

U.S. natural gas prices have been on a winning streak, driven by increasing power demand and a decrease in supply surplus.

Analysts at RBC Capital Markets noted that natural gas inventories are moving toward average levels, recovering from a surplus of nearly 450 billion cubic feet (Bcf) earlier this year.

Natural gas prices have recently approached $3.00 per million British thermal units (MMBtu).

The Energy Information Administration (EIA) reported a storage injection of 55 Bcf for the week ending September 28, falling short of expectations of 59 Bcf. The current total working storage is 3,547 Bcf, which is higher than both last year’s 3,420 Bcf and the 5-year average of 3,357 Bcf.

RBC projects that peak storage will hit 3.9 trillion cubic feet (Tcf), 150 Bcf above the 10-year average.

Additionally, strong power demand and anticipated increases in LNG exports are expected to support rising natural gas prices.

Weather forecasts suggest most of the U.S. will experience above-average temperatures, with a mild cold front on the East Coast, likely increasing heating and cooling demands.

This positive backdrop has led to a 12% year-to-date increase in natural gas equities, outperforming oil-related stocks, which have declined by 4%. Current natural gas stock prices are approximately $5.02/Mcf, significantly higher than the 5-year average of $3.50/Mcf.