U.S. natural gas futures softened on Wednesday as support from strong power generation demand is expected to slowdown, on forecasts of more moderate temperatures, Kallanish Energy reports.
The month-ahead gas futures dropped 0.9%, or 1.9 cents, to settle at 2.15 per million British thermal units (MmBtu). This is the lowest close since the beginning of the month, and 4% lower than last week’s highest close since January.
The day-ahead Henry Hub gas price was trading at $2.19/MmBtu, while Dominion South was $1.25/MmBtu and the Waha hub gas was $1.39/MmBtu.
On Aug. 6, the month-ahead futures contract for delivery at the Henry Hub settled at $2.17/MmBtu, which is 49 cents up from July 1.
The futures prices increased substantially at the beginning of the month. Before Aug. 3, the front-month futures price had settled higher than $2/MmBtu only once since Jan. 17, 2020, the EIA said Tuesday.
The agency said in its Short-Term Energy Outlook (STEO) that “natural gas prices will generally rise through the end of 2021 but the sharpest increases will be during this fall and winter, when they rise from an average of $2.11/MmBtu in September to $3.14/MmBtu in February.”
The support to higher prices will come from rising demand heading into winter, coupled with reduced production. EIA forecasts Henry Hub spot prices to average $2.03/MmBtu in 2020 and $3.14/MmBtu in 2021.
This post appeared first on Kallanish Energy News.