Natural gas prices found themselves at $3.18/MMBtu in the morning, a nearly 3.5% increase from yesterday’s close.
The high of today’s rally is recorded at $3.198/MMBtu – a price that brings it past May’s rally high at $3.15/MMBtu.
Today’s venture upwards was largely a result of changing weather expectations.
Overnight, weather forecasts drifted hotter, causing cooling degree days (CDDs) to shift higher in Week 2 (6/15-6/22).
The greatest anomalies from expected historical temperatures are centered in the Midwest; however, over the entirety of the 15-day forecast, every region of the United States from the Pacific to the South Atlantic is set to report higher CDDs than anticipated from yesterday’s model runs.
In the extreme short-term, this price spike can be attributed to changing weather patterns; however, a broader view of the market reveals there is no greater recipe for higher prices than stagnating production coupled with higher seasonally-driven weather demand.
Source: Gelber and Associates