Nat-Gas Prices Rebound on Pre-Weekend Short Covering

Natural gas prices rebounded slightly on Friday, reversing a one-week low. The increase occurs after some short covering occurred on the pre-weekend. Initial price dips were due to cooler weather forecasts predicting reduced energy demand from air conditioning. Forecasts shifted, anticipating fewer days with above-average temperatures in the South and Southeast.

JPMorgan refrained from predicting an end to the Iran war. Crude oil prices declined as hopes grew for increased Middle East energy exports. European gas prices reached a three-year high, supported by reduced Middle East supplies due to the Strait of Hormuz closure. This situation benefits European nat-gas demand ahead of winter.

However, a potential "Super El Niño" could raise global temperatures, decreasing heating demand for natural gas. US dry gas production on Friday was 113.8 bcf/day, up 4.9% year-over-year. Gas demand in the lower 48 states was 75.7 bcf/day, with a slight decrease of 0.6% year-over-year. LNG net flows to US export terminals were 19.2 bcf/day.

US electricity output saw a 16.1% year-over-year increase in the week ending September 12. Despite higher storage levels, EIA projections show US nat-gas reserves increase to 3,985 bcf by October, above average levels.