The US is facing a tight natural gas market as many parts of the nation are facing hotter than usual weather conditions this year. The immense power demand for cooling created a long-lasting surge of natural gas demand, as many power plants run on natural gas to generate electricity. As of today, the US benchmark natural gas price at the Henry Hub was at $3.549, up by 1.52%, leading to the highest price since 29 months ago.
Last Thursday, the Energy Information Administration reported a net injection of natural gas into the storage of 55 billion cubic feet, significantly lower than analysts had expected. The lower-than-expected stockpiles signaled a tighter market. In the meantime, historical heat waves are hitting the Pacific Northwest, and hot high pressure in the West into Texas sent temperatures in the high 90s to the 110s in the weekend. With the average rate of injections into storage 15% lower than the 5-year average, we can only expect the natural gas price to keep rising till the supply and demand re-balances.
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