On Monday, natural gas snapped its five-day crash after forecasts of colder weather highlighted the need for more pipeline capacity.
US natural gas December futures surged by 5.02% to ¢324.30 per metric million British thermal units (MMBtu) on November 14. Analysts expect further acceleration of up to 0.65% to ¢326.40 per MMBtu in the upcoming session.
Natgas hit a one-week high after models for late November weather predicted temperatures plummeting sharply lower than previously expected. The increase had analysts anticipate higher business and household purchases of the energy commodity for the remainder of the year.
Unfortunately, the Energy Information Administration (EIA) halted its weekly natural gas storage report to accommodate a systems upgrade. Even so, the market consensus expected a consumption of 86.00 billion cubic feet (Bcf) for the week ending November 07.
With production for the said week confirmed at 79.00 Bcf, the consensus indicates a deficit of -7.00 Bcf. If proven correct, the projected figure would mark the first natgas overdraw for the 2023/24 winter season.
In contrast, the US saw milder weather in the week ending November 10. Subsequently, analysts projected a natural gas surplus of 45.00 Bcf, which is more than enough to wipe out the earlier shortfall.
Meteorologists expect the weather in the US to be warmer than average through November 21. However, they anticipate significantly colder than usual weather for the rest of the month.
More Pipeline Capacity for Natural Gas Critical
The Federal Energy Regulatory Commission (FERC) urged lawmakers to fix regulatory blind spots on natural gas supply as winter looms. Moreover, the North American Electric Reliability Corp (NERC) added that the US is on track to repeat 2022’s power outages.
Winter Storm Elliot in 2022 covered almost two-thirds of the US in sub-freezing temperatures and extreme weather warnings. As a result, the country suffered unprecedented disruptions in energy generation supply and delivery.
With massive demands for heating fuel and power generation, natgas pipelines were almost unable to keep up. The Interstate Natural Gas Association of America (INGAA) confirmed that Elliot pushed pipeline infrastructure to the brink of collapse.
If nothing is done, NERC predicts that half of the US may have no power if another Elliot happens.
