Forexpros – Natural gas futures rocketed higher Monday, exploding to a seven-month high as forecasts for higher-than-average temperatures boosted the outlook for gas-powered electricity consumption.
On the New York Mercantile Exchange, natural gas futures for delivery in September traded at USD3.200 per million British thermal units during U.S. afternoon trade, jumping 6.20%.
Sparking the gas rally, warmer-than-normal temperatures increase the need for gas-fired electricity to power air conditioning, boosting demand for natural gas. Natural gas accounts for about a quarter of U.S. electricity generation.
A bout of hot weather across much of the U.S. over the last several weeks has helped ease the oversupply of natural gas as power generators burned more of the fuel to meet demand.
Total natural gas inventories are now approximately 15% above the five-year average for this week. Stockpiles rose to 60% above the five-year average earlier this year after mild winter weather dampened demand for natural gas to heat homes and businesses.
However, market analysts have warned that without strong demand through the rest of the summer, gas inventories will reach the limits of available capacity later this year.
Gas prices fell sharply on Friday, declining more than 3% as trading on the August contract expired, but those losses were regained on the September contract ahead of the start of trade on Monday.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in September slipped 0.21% to USD89.94 a barrel, while heating oil for September delivery slid 0.11% to USD2.887 per gallon
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