US natural gas futures recovered from early losses to settle up for a fifth straight day on Friday, notching its best weekly gain in eight, on forecasts for hotter-than-usual weather that could boost cooling demand. Front-month gas futures for September delivery on the New York Mercantile Exchange rose 2.5 cents, or 0.9 percent, to close at $2.871 per million British thermal units. The session high was $2.907, a peak since July 29.
For the week, the front-month contract gained about 11 percent, its most since the first week of July.
Earlier on Friday, gas futures slipped as profit-taking set in after four consecutive days of gains, with the September contract hitting a session low of $2.797. Prices rebounded toward the close on expectations the weather would remain hot next week and that utilities will burn unusual amounts of gas to feed air conditioning demand.
"The market is waiting for what the weather pattern would look like for next week and how the supply is going to react to (a) lingering increase in demand at the end of summer," said Kobe Liu, analyst at Schneider Electric.
The US Energy Information Administration said utilities across the country injected 11 billion cubic feet of natural gas into storage for the week ended August 19, the lowest in at least six years for a late August week. Utilities burn only part of the gas they draw from the ground each summer, storing the rest for fall and winter heating.
Both the European and US weather models forecast higher-than-customary temperatures for the next two weeks, raising expectations that power demand to run air conditioners will exceed levels seen in recent summers.
Forecasts for an active hurricane season this year have also supported gas prices, with analysts expecting some reduction in supplies if storms damage energy infrastructure in the Gulf of Mexico.
Analysts expect physical gas at Henry Hub benchmark in Louisiana to average $2.38 per mmBtu in 2016 and $3.09 in 2017. That compares with an average of $2.61 per mmBtu in 2015, which was already the lowest since 1999.
Comments
Comments are closed.