U.S. Natural Gas Prices Surge Amid Demand

U.S. natural gas prices have recently surged, supported by rising power demand and decreasing supply gluts.

Analysts at RBC Capital Markets noted that a more positive outlook is developing, with natural gas inventories moving towards average levels from a nearly 450 Bcf excess seen earlier this year. Natural gas prices are nearing $3.00 per million British thermal units (MMBtu).

On September 28, the Energy Information Administration reported a U.S. storage injection of 55 Bcf, slightly below expectations of 59 Bcf, bringing total working storage to 3,547 Bcf. This figure is up 127 Bcf compared to last year and 190 Bcf above the five-year average of 3,357 Bcf.

RBC estimates that storage could peak at 3.9 trillion cubic feet (Tcf) this fall, exceeding the 10-year average by 150 Bcf. Additionally, strong power demand and anticipated increases in LNG exports are expected to boost natural gas prices further.

Forecasts indicate above-average temperatures across most of the U.S., coupled with a mild cold front on the East Coast, which may increase heating and cooling demand. This positive environment has led to a 12% gain in natural gas equities year-to-date, outperforming oil-focused equities, which have decreased by 4%. Natural gas stocks are currently valued at approximately $5.02/Mcf, significantly higher than the five-year average of $3.50/Mcf.