Last Thursday’s natural gas storage report was the sixteenth straight week that the natural gas going into storage exceeded the 5-year average for that corresponding week. And tomorrow we should see the 17th in a row with potentially even more natural gas build up in storage than the week before as analysts are looking for an 80+ bcf increase again.
At the end of last week and the beginning of this week the weather forecasts were for increased temperatures throughout the US, and therefore an increase in the usage of air conditioners and power fueled by natural gas. Prices for natural gas contracts moved upward along with electricity rates. For two days this week the current gas contract touched $4, the top of my previously mentioned trading range.
Today, Wednesday August 13, gas prices have begun to drop significantly, and are down over 10 cents today, dropping back into the $3.80’s per contract. I still maintain we will see gas prices fluctuate this summer between $3.60 – $4, with a corresponding fluctuation in electricity rates. Watch for potentially lower prices in October and maybe November as long as the record production of gas continues.