The September 2020 natural gas futures settled yesterday, August 25, 2020, at 2.482/MMBtu, which was the second highest closing price for this year. The factors below are continuing to drive up natural gas prices and continue the volatility that we are seeing in the natural gas market:
Weather – The National Oceanic and Atmospheric Administration, NOAA.gov, revised its weather prediction for the lower 48 states from at normal to above normal for most of the states from August through October, which is their 3 month outlook which is pictured above. Due to tropical storms Marco and Laura impacting the gulf coast, the rig count is currently at 69, which is one rig count away from the all time low rig count of 68.
Demand – Record demand – There is concern that the near record demand may also dwindle down natural gas supply which will then cause an increase in pricing. ERCOT reported electric demand was 1% higher in June 2020 compared to June 2019. Also, ERCOT set a new monthly demand record of 73,962 megawatts for July 2020.
Exports – LNG exports are up 5% week over week.
The October 2020 natural gas futures prices hit 2.654/MMBtu this week. The forward prices continue to climb as the weeks go by. It will be an interesting week to watch.