Investing.com — U.S. natural gas prices have been on a huge winning streak lately, driven by a bullish wave of rising energy demand and a shrinking supply glut.
“The more bullish scenario is beginning to unfold, with natural gas inventories moving to moderate levels, compared to a surplus of nearly 450 billion cubic feet earlier this year,” RBC Capital Markets analysts said in a Thursday note.
have recently posted gains, closing in on $3.00 per million British Thermal Units (MMBtu).
The bullish backdrop for natural gas prices is starting to take shape, the analysts added, as inventories “move toward moderate levels, compared to a surplus of nearly 450 Bcf earlier this year.”
The Energy Information Administration on Thursday reported a U.S. storage injection of 55 Bcf for the week ended September 28, below consensus expectations of 59 Bcf.
Total working storage now stands at 3,547 Bcf, 127 Bcf higher than last year’s 3,420 Bcf and 190 Bcf higher than the five-year average of 3,357 Bcf.
Heading into the fall, RBC estimates that storage peak will likely reach 3.9 trillion cubic feet (Tcf), which is 150 Bcf above the 10-year average.
In addition to declining inventory levels, strong energy demand and visibility on increases in LNG exports provide further support for natural gas prices, the analysts said.
Weather forecasters estimate that most of the US will experience above-average temperatures, while the East Coast will experience a mild cold front, potentially increasing demand from both a heating and cooling perspective.
The bullish backdrop for natural gas prices has helped natural gas stocks rise 12% this year, outperforming oil-focused stocks, which are down 4%, the analysts said.
Natural gas stocks currently reflect a price of about $5.02/Mcf, well above the five-year range of $3.50/Mcf, she added.
