MCX Natural Gas yesterday settled up by 7.79% at 362.5 driven by a bullish mix of expectations for higher demand due to warmer weather projections and sustained outages due to storm Ida while also tracking a rally in global gas prices.
A slow return to production post Ida in the Gulf of Mexico was also driving the price rally. Temperatures over the next two weeks are estimated to be warmer than usual for this time of year with 150 cooling degree days (CDDs) projected compared with a 30-year average of 122 CDDs for the period.
This is also higher than the 10-year normal and the same time last year. CDDs, used to estimate demand to cool homes and businesses, measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18 degrees Celsius).
Goldman Sachs also said in a note that recent tighter-than-consensus storage injections added to existing winter storage concerns and further increased the winter risk premium priced in the market.
The bank raised its price forecasts for summer and winter 2022 and winter 2023 by $0.15. U.S. pipeline exports to Mexico rose to an average 5.9 bcfd so far this month, from 6.2 bcfd in August, but were slightly lower than June’s monthly record of 6.7 bcfd.
Trading Ideas:
- Natural Gas trading range for the day is 324.9-388.7.
- Natural Gas jumped driven by an expectations for higher demand due to warmer weather projections.
- A slow return to production post Ida in the Gulf of Mexico was also driving the price rally.
- U.S. Gulf Coast energy companies have advanced efforts to restart facilities, but larger hurdles remain for producers and refiners.
