A slightly upbeat EIA outlook lifted natural gas prices.
Natural gas futures rose 3.8% to $3.04 per million British thermal units on Tuesday after the U.S. Energy Information Administration released a slightly positive short-term energy outlook.
That’s why United States Natural Gas (UNG) is today’s highest flyer, climbing nearly 4%.
The EIA forecast natural gas inventories to hit 3,940 Bcf by the end of October 2017, 2% higher than the five-year average but 2% lower than last October’s record high. The government agency expects Henry Hub natural gas prices to average $3.10 per million BTUs this year and $3.40/mmbtu next year. Last year it was $2.51, the lowest annual average price since the late 1990s.
JPMorgan’s Shikha Chaturvedi wrote in report published last week:
The recent flush in price post the holiday creates a precarious situation for those looking to reinitiate length, us included. On the one hand, weather forecasts have been relatively supportive but fickle—offering heat but holding that heat in demand regions with little impact on Henry Hub day-ahead physical price. On the other hand, a steady stream of daily production prints suggests that that the summer 2017 production trajectory is headed higher.
He also wrote that an October-end storage trajectory of 3.8 Tcf would be a more “supportive narrative for winter.” Given the EIA’s forecast for 3.9 Tcf, this blogger wonders if the natural gas “narrative” has changed.