U.S. natural gas prices continue to climb on Wednesday, with futures surging above $8 for gains of more than 5% this morning, as concerns over inventories mount ahead of a summer that promises strong demand.
In the United States, natural gas prices reached $3.347, for a rally of 5.29% at 9:36 a.m. EST.
In the previous session, U.S. natural gas hit a 14-year high, jumping more than 9%, before pulling back to close at just under $8.
On Tuesday, the American Petroleum Institute (API) reported a decline in gasoline inventories of 4.50 million barrels for the week ending April 29, following the previous week’s draw of 3.91 million barrels.
The drop in inventory comes as weather forecasts show unusually high temperatures in parts of the country for early May, which will mean an early start to the U.S. air conditioning season, signaling growing demand for natural gas.
Natural Gas Information quoted Bespoke Weather Services as saying that current inventory and production levels would not be sufficient to meet this demand, which could lead to a situation in which natural gas prices rise above $10 in the coming weeks.
US gas inventories are now estimated to be 17% below normal for this time of year as exports hit new records and producers are holding back any new production.
Recording volumes of fuel is exported from the Gulf Coast, depleting domestic gasoline and diesel supplies. According to Vortexa tracking data cited by Bloomberg, in April US companies were exporting up to 2.09 million bpd of gasoline, diesel and jet fuel from the Gulf Coast.
By Charles Kennedy for Oilprice.com
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