Natural gas prices up again today on bullish storage data

Graph: Bloomberg, Natural gas five-day chart

Graph: Bloomberg, Natural gas five-day chart

Natural gas prices rose to a five-month high today as information from the Department of Energy showed natural gas markets are tightening. Economist were expecting a build of 83 Bcf of natural gas this week. The actual numbers came in slightly lower at 82 Bcf.

While storage levels remain well above five-year averages, the shrinking growth of inventories is good news for markets. Inventories as of May 27 stood 35% above the five-year average for this time of year, down from 37% above five0year average levels the prior week.

“The absolute levels [of natural gas in storage] are still huge, but the change is definitely indicative of a tightening market,” Kyle Cooper, analyst at IAF Advisors in Houston, told The Wall Street Journal.

As the weather begins to warm up, many are hoping summer may bring higher demand for natural gas as people cool their homes. This, combined with fewer companies actively drilling for more natural gas, could help balance natural gas markets.

“With the weather once again changing to another warming trend, the market is looking for a bump up in consumption at a time when production may be starting to ease,” said Dominick Chirichella, analyst at the Energy Management Institute, in a note.


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