As we approach the half-year mark, natural gas prices are almost down by 40%. However, the natural gas futures have managed to close one of their best months in 2023. This has raised the optimism among natural gas traders that the summer season will lead to more demand.
Just like the winter season requires heating, the summer season also requires cooling of the houses, which requires electricity. And one of the fuels that are used to generate electricity is natural gas which has improved the sentiment regarding this fuel.
Natural Gas Futures Gained 2.5%
The natural gas futures contract for August gained 3.6%, which is around 9.7 cents, and settled at the price of $2.7980/mmBtu.
Similarly, the gas futures are also up by 2.5% just this week. If we look at the monthly basis, that's a gain of around 24% and around 26% for the quarter. If we look at the natural gas futures on a yearly basis, it is down by 37%, which is the bigger picture.
Together, all these different timeframes paint an interesting picture of natural gas... In the long-term, natural gas is down, but it is up in the short and medium term.
For now, all the bets are now on the summer weather, but the temperature is still not at its peak. However, the cooling demand in the USA is rising every day, especially in the state of Texas.
Data related to the demand for air-conditioning is 65 CDDs (cooling degree days) which is almost close to the value of 70 CDDs normally considered as normal.
CDDs are a measure that's used to figure out the cooling demand at homes and businesses. Now that the CDDs have reached the value of 65, it is just shy of an additional 5 points to reach the average value of 70.
Looking ahead, the months of July, August, and September will likely lead to an increase in the cooling demand, which will, in turn, support natural gas prices.