Natural gas prices were holding close to unchanged Friday, with the market divided about whether demand is strong enough to burn up enough new supply to stave off another glut.
Futures for September delivery recently fell 0.3 cent, or 0.1%, to $2.964 a million British thermal units on the New York Mercantile Exchange. That leaves prices in the middle of a 30-cent range they haven't traded outside of in almost two months, a period during which volatility has plummeted with few signs about the market's next clear move.
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Strong heat in recent weeks has driven strong demand, a common trend in the summer when power plants burn more gas to fuel air conditioners. Storage levels repeatedly have grown at a weekly pace slower than the average from years past, a sign supply isn't keeping up with demand as well as it has in years past.
But supply in July has at times reached high points going back more than a year, and weather forecasts are showing extreme heat may not last. Others have predicted that dozens of new rigs drilling for oil in West Texas are also likely to produce a new wave of gas supply in the months to come, raising fears that another glut is possibly on the way.
That trend thwarted many systematic traders who had anticipated a rally that commonly comes in the late spring and summer, brokers have said. That has now damped any excitement to buy or even trade gas, further entrapping the market in a tight range, said Peter Donovan, broker for Liquidity Energy LLC in New York.
"A lot of guys are pretty disenchanted with the lack of" volatility," he said. "Nat gas is doing nothing."
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(END) Dow Jones Newswires
July 28, 2017 12:14 ET (16:14 GMT)