US Production Under-whelming, Cool & Hot Conditions Next 7-Days Leads to Prices Reclaiming $8
May 3, 2022: June’22 nat gas futures closed 26¢ higher Monday at $7.51. Prices are further higher today to near $8 as bulls are back to buying every dip and have rocketed prices a hefty $1.60 since lows early last week. Gains have been attributed to tight US supplies, expectations of a hotter than normal US summer, and US production failing to increase despite spiking gas prices. Of course, the Russian invasion of Ukraine and strong inflation have helped. Gains Monday and overnight were likely also aided by chilly late season weather systems tracking across the northern US this week with lows of upper 20s to lower 40s, followed by a taste of early summer heat this weekend over Texas and the S. Plains, where highs will reach the 90s to near 100°F. It’s a bit too early in the season for impressive heat to drive strong cooling demand. However, with tight US supplies, any threat of early season heat could provide strength, especially since bullish news/trends typically leads to a strong reaction higher. And with both the GFS and EC gaining a few Bcf in demand overnight on a mix of hotter and cooler trends on the front 10-days, this is aiding already strong bullish sentiment. The coming pattern would be more impressive if not for much of the weather data still forecasting a bearish set up May 12-18 as cooler than normal weather systems return across northern and central US, while coverage of 90s decreases across the southern US. But for today, June’22 contracts are back to testing $8.