US natural gas bulls, who have waited months for prices to rebound from a lackluster winter, finally got some good news this week.

The US Energy Information Administration forecast on Tuesday that prices for the fuel used in power generation, heating and cooking are poised to surge by over a third in the second half of the year.

It’s been a long time coming. Gas prices have struggled since January to crack $3 per million British thermal units as a powerful El Niño fueled the nation’s warmest winter on record, eviscerating demand and leaving a huge glut in storage facilities.

Even now, as Americans crank up their air conditioners to cope with heat waves from New York to California, gas storage levels are more than 18% above the five-year average.

Prices, meanwhile, are about 10% lower than a year ago. Last week, they slumped to an eight-week low of $2.32.

It’s quite a reversal from 2022, when US gas soared above $9 to a 14-year high after Russia invaded Ukraine and Europe clamored for American supplies.

The dramatic turnaround this year prompted several major producers including EQT Corp. and Chesapeake Energy Corp. to temporarily slash output.

Natural Gas Set for Rebound

Intraday futures have been relatively low in first half

Now, US forecasters say those production cuts are starting to move the needle and should help bring storage levels down closer to normal over the next six months.

Prices, as a result, will average almost $2.90 in the second half of the year compared with $2.10 in the first, according to the Energy Information Administration.

That forecast, however, will need some cooperation from Mother Nature.

“A cold start to November in the east could make the prediction a reality,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities Inc. “Storage will need to decrease quickly this fall” to make it happen.

So gas bulls may need to be patient for a while longer.

—Elizabeth Elkin, Bloomberg News