Impact of Hurricane Debby on demand
Hurricane Debby, which made landfall in Florida as a Category 1 storm, added another layer of complexity to the market. The storm’s path through the Southeast brought cooling rains and lower temperatures, lowering demand for refrigeration systems – a bearish factor for natural gas prices. Although the storm disrupted some supply chains and caused power outages, the overall impact was negative for demand as the cooling effect outweighed any supply concerns. In addition, the National Weather Service’s forecast for cooler temperatures in northern regions put further pressure on prices, as lower demand in those areas could not offset lower consumption in the storm-affected Southeast.
Supply concerns and storage data
Supply-side factors played a key role last week, with mixed signals emerging from storage capacity and production data. The US Energy Information Administration (EIA) reported lower-than-expected storage additions of 21 billion cubic feet (Bcf), which initially provided some support to the bull market. However, storage levels remain well above the year-ago average and the five-year average, which continues to weigh heavily on market sentiment. Meanwhile, natural gas production remained stable, maintaining robust production of around 100.6 Bcf/day despite ongoing market pressures.
Market sentiment and price development
Despite the pessimistic fundamentals, bargain buying occurred as traders took advantage of the low prices. This activity, along with a slight recovery in demand expectations for the coming week due to the forecast of warmer weather, helped lift prices from their lows. The market’s resilience at the $1.90 level and the formation of the weekly reversal bottom indicate cautious optimism. However, this sentiment is tempered by factors such as high inventories and stable production.
