US natgas prices up on hotter weather forecasts
Front-month gas futures for August delivery on the New York Mercantile Exchange were up 10 cents, or 3.0%, to $3.414 per million British thermal units at 9:09 a.m. EDT (1309 GMT), putting the contract on track for its highest close since July 2.
That price increase occurred despite rising output and forecasts for lower demand over the next two weeks than previously expected. Even though gas futures have dropped about 14% over the past three weeks, speculators last week boosted their net long futures and options positions on the New York Mercantile Exchange and Intercontinental Exchange to their highest levels since early-April, the US Commodity Futures Trading Commission's Commitments of Traders report showed.
The US National Hurricane Center said a tropical disturbance off the east coast of Florida has about a 30% chance of strengthening into a tropical storm as it moves west into the Gulf of Mexico off Louisiana, Mississippi, Alabama and Florida over the next week.
Analysts have noted that tropical storms in the Gulf can knock some production out of service, but noted that only about 2% of all US gas output comes from the federal offshore Gulf of Mexico.
The analysts noted that storms were more likely to be demand-destroying events as they knock out power to homes and businesses, especially if they shut a liquefied natural gas (LNG) export plant.
Meteorologists slightly reduced their forecasts for hotter weather for this week but continued to project weather across the Lower 48 US states will remain mostly warmer than normal through at least July 29, especially in late July.
Even though the weather has remained above normal so far this summer, analysts expect energy firms to keep injecting more gas into storage than usual in coming weeks.
That's because output hit a record high in June and was on track to top that in July, while gas flows to LNG export plants have so far languished since hitting a record in April.
There is currently about 6% more gas in storage than the five-year (2020-2024) normal, and analysts expect that surplus to grow in coming weeks.
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