US Natural Gas Drops 3.2% on Warmer Weather Outlook
Nymex natural gas settled 3.22% lower as warmer US weather forecasts reduce heating demand. European prices remain elevated due to supply constraints.
October Nymex natural gas futures closed down 0.094 dollars on Wednesday. This represents a 3.22 percent decline in value. The contract hit a two-week low before settling lower.
Warmer weather forecasts in the United States drove the price drop. The Commodity Weather Group expects above-average temperatures in the South and Southeast. This outlook persists through September 18.
Weather Forecasts Reduce Heating Demand
Analysts link this shift to a potential Super El Nino event. Warmer-than-normal temperatures are expected across the Northern Hemisphere. This should lower natural gas consumption for heating this winter.
European Supply Constraints Support Global Prices
European natural gas prices reached a 3.5-year high. Supplies from the Middle East have dropped sharply. The closure of the Strait of Hormuz limits exports to Europe.
European storage levels are well below normal. This is a bullish factor for winter demand. These global dynamics provided some support for US prices despite the local drop.
Production and Storage Data Show Surplus
US dry gas production was 113.5 billion cubic feet per day. This is up 3.9 percent year-over-year. Lower-48 state gas demand was 80.2 billion cubic feet per day.
The US Energy Information Administration projects storage levels of 3,985 billion cubic feet by October. This would be the highest level in ten years. It is 5 percent above the five-year average. As reported by GN markets/commodities, these figures signal adequate supplies for the coming season.
