Natural Gas Monthly Forecast – September 2017
The natural gas prices were general in an upbeat mood for the month of August which has to be interpreted as quite normal for the month as we approach the winter. We have been saying in many of our forecasts that natural gas prices are one of the most seasonal ones which wax and wane depending on the weather outlook for a specific region. Most of the natural gas in the world has been used mainly for heating purposes so far and hence the demand has been dominant in regions that have a cold weather.
Natural Gas Move Higher in Early Part of Month
But over the last few years, we have seen widespread use of natural gas in other industries and factories and this has been reducing the seasonality of the prices of natural gas over the last few years. It has also ensured that the natural gas is being used in many other parts of the world and just not the cold ones alone. This has helped to keep the natural gas prices buoyant and in demand for various other parts of the year as well and hence made the prices more stable and reliant as well. On the other hand, it has made the trading of gas contracts a bit more difficult than usual as the traders cannot rely on the weather forecasts alone any longer.
The gas prices had a very good week in the first week of August which was mainly due to the increase in demand and also due to the fact that the weather forecasts had predicted a cold winter, which would have increased the demand for the gas for heating and this in turn led to the gas prices moving higher. It was then followed by 2 weeks of choppy trading with no specific direction but as we closed the 3rd week, we got the news and reports that said that Hurricane Harvey was heading towards the Houston. Then, it was all mayhem in the city of Houston as the hurricane hit the city pretty badly. While this change brought in a lot of risk and uncertainty and led to the oil prices moving lower, the gas prices moved higher during this period as the demand for gas usually picks under such circumstances.
Natural Gas Prices Higher After Harvey
Though the hurricane led to the closing down of a few pipelines, it also led to some very cold weather not only in Houston but in the surrounding areas as well and this led to the increase in the requirement for heating. This led to an increase in demand and with the pipeline shutdown, there were also supply concerns, all of which helped to push the gas prices higher to close the month.
Looking ahead to the month of September, we are likely to see the gas prices continue to go up during the course of the month. The US is just limping back to normalcy after the hurricane and with the cold weather there continuing to dominate, we are likely to see the demand for gas prices continue to be high during the first part of the month. With the pipelines also being shut down and likely to get back to normal only after a week or so, this forms a combination of higher demand and lesser supply, which is likely to keep the prices of narutal gas pretty much buoyant.
Natural Gas Prices Likely to Remain Buoyant
Also, towards the second half of the month, we are likely to see the weather getting colder and colder and again, this is likely to keep the demand for gas high. We are also likely to see the demand for gas pick up from the other parts of the world as well and a combination of this is likely to push the gas prices higher. As we had mentioned earlier, this is all part of the seasonal demand for natural gas and the price moves are also expected to follow the seasonal flow and remain in the highs of the range.
This article was originally posted on FX Empire
