US natural gas futures on Wednesday rose to their highest level this month with a change in the latest forecasts calling for warmer weather and more cooling demand over the next two weeks. Front-month gas futures rose 6.1 cents, or 2.2 percent, to settle at $2.883 per million British thermal units, the highest close since July 28.
With the warmer weather expected next week, meteorologists now predict temperatures in August will be slightly warmer than average, the same as June and July. Earlier they forecast August would be near normal. Thomson Reuters projected US gas consumption will edge up to 75.9 billion cubic feet per day (bcfd) next week as air conditioning demand rises from 74.3 bcfd this week, which is higher than previously forecast.
US gas production in the lower 48 states increased to an average of 72.4 bcfd over the past 30 days, up from 70.9 bcfd during the same period last year. That was still well short of the 73.7 bcfd seen during the same time in 2015 when output was at a record high, Reuters data showed. US exports were expected to average 8.5 bcfd this week, up 37 percent from a year earlier, according to the data.
Analysts said utilities likely added 40 billion cubic feet (bcf) of gas into storage during the week ended August 4, leaving inventories about 2 percent above normal for this time of year. That compared with a 24 bcf increase during the same week a year earlier and a five-year average build of 54 bcf.
Analysts said utilities likely will stockpile just 1.7 trillion cubic feet (tcf) of gas during the April-October injection season. Limiting the amount of fuel going into storage are several factors, including relatively low output, rising sales abroad and higher-than-average cooling demand earlier this summer. That build, which is far below the five-year average of 2.1 tcf, would put inventories at 3.8 tcf at the end of October and is less than the year-earlier record of 4.0 tcf and the five-year average of 3.9 tcf.
Analysts said prices could spike later this year should inventories remain low and if the coming winter is colder than the last two winters, which were among the warmest on record.
Comments
Comments are closed.