Natural Gas Future Rises as Heat Lifts Demand Power Plant Fuel
Natural gas futures rose for a second day as hotter-than-normal weather boosted demand for gas- fired electricity for air conditioning.
Temperatures will be above normal across much of the U.S. Midwest and East from Aug. 1 to Aug. 5, according to the National Weather Service. The Energy Department on July 29 may report that U.S. gas stockpiles rose 32 billion cubic feet last week, according to the median of five analyst estimates in a Bloomberg survey. The five-year average gain is 50 billion.
“It’s pretty hot and the AC is running,” said Kyle Cooper, managing director at energy consultant IAF Advisors in Houston. “The next injection number is going to be pretty bullish.”
Natural gas for August delivery rose 6.3 cents, or 1.4 percent, to settle at $4.675 per million British thermal units on the New York Mercantile Exchange. Gas has gained 30 percent from a year ago. The August contract expires tomorrow. The September gas futures contract gained 6.3 cents to $4.646.
“The last days of a contract could be dictated more by financial considerations of those who have to get out as opposed to any real supply-demand fundamentals,” Cooper said.
August may see more heat in the Midwest than in the Northeast, according to Commodity Weather Group LLC in Bethesda, Maryland.
Weather Outlook
Chicago will have a high of 89 degrees Fahrenheit (32 Celsius) on Aug. 3, 5 degrees above average, according to AccuWeather Inc. in State College, Pennsylvania. New York will have a high of 83.
About 23 percent of electricity is generated using natural gas, according to the Energy Department.
“For the past couple of weeks the price was more weather- dominated,” said Tom Orr, director of research at Weeden & Co., a brokerage in Greenwich, Connecticut. “And now I think the focus is on the recovering strength of the economy.”
The S&P/Case-Shiller index of property values in 20 U.S. cities increased 4.6 percent in May from a year earlier, the biggest year-over-year gain since August 2006, the group said today in New York.
“We’ve been seeing a little bit of hopefulness in the housing numbers,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “At this point, most traders are keeping a small eye on the economy and saving up their major reactions for the coming EIA underground storage report.”
Gas supplies rose 51 billion cubic feet in the week ended July 16, the Energy Department’s Energy Information Administration reported last week.
Supply Report
The stockpile total of 2.891 trillion cubic feet was 9.9 percent higher than the five-year average, narrower than a 10.7 percent gap the previous week. The deficit to year-earlier supplies widened to 1.8 percent from 1.1 percent.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, rose 6.8 cents, or 1.5 percent, to $4.7184 per million Btu on the Intercontinental Exchange.
Gas futures volume in electronic trading on the Nymex was 178,233 as of 2:36 p.m., compared with a three-month average total of 250,000. Volume was 191,592 yesterday. Open interest was 773,946 contracts, compared with the three-month average of 824,000. The exchange has a one-business-day delay in reporting open interest and full volume data.
Key:
Comments
.: Sponsor Links :.