Natural gas production is still set to grow, which should keep a lid on prices for the rest of the year, according to Barclays.Prompt natural gas prices have climbed higher, especially at the front of the curve, driven by incrementally cool weather and rising heating demand.The latest EIA storage report for the week ending November 14 showed an above-consensus withdrawal at 17 Bcf –the first withdrawal of the year.

Much of recent gas burn and price strength was due to colder-than-normal conditions across most of the lower-48, and that cold is forecast to persist in the near term, especially in the mid-continent, albeit to a lesser degree.

In fact,over the prior week, prices staged a roughly 50c rally (up 12.5% w/w), buoyed by cold forecasts against the backdrop of rising heating demand.

“We think that rising production, driven by de-bottlenecking in the northeast, should help keep a lid on prices, Barclays said.

According to Barclays, at nearly $4.50/MMBtu, current prices look high. With strong production (MTD production has averaged 70.1 Bcf/d, Bentek) and storage levels ending up healthier than originally expected by the end of the injection season, ample supply should cap prices in lieu of weather-driven price spikes during the coldest parts of the winter.
Source: Barclays