Record-High Temperatures Boost Power Demand but Ample Gas Inventories Prevent a Bigger Jump in Prices

Since early March, U.S. and European gas prices have climbed steadily in the anticipation—and eventual onset—of much warmer than normal early summer temperatures even as producers curbed supply to contend with the glut built up during the past mild winter. Although U.S. and European gas storage inventories have been drawn down from early 2024, they remain at heightened levels for this time of year.

Key Highlights:
-- For full-year 2024 and 2025, we forecast the NYMEX natural gas price to average $2.50/mcf and $3.25/mcf, respectively, in line with our previous forecast.
-- We expect the U.S. natural gas supply/demand balance to continue to tighten, as record-breaking early summer temperatures have boosted gas-generated electricity demand.

“However, since gas storage remains ample, it will require further significant changes in market conditions for the market to enter the 2024–25 winter with inventory at an average or below-average level,” said Andrew O’Conor, Vice President, Corporate Ratings, Energy & Natural Resources.