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Natural gas extends gains as weather forecasts point to warming trend

Published 06/19/2013, 11:54 AM
Updated 06/19/2013, 11:55 AM
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Investing.com - A natural gas rally extended into a third day on Wednesday after weather forecasting models continued to point to above-normal temperatures settling in for a good portion of the U.S. over the next two weeks.

In the New York Mercantile Exchange, natural gas futures for delivery in July traded at USD3.951 per million British thermal units, up 1.17%.

The commodity hit a session low of USD3.906 and a high of USD3.974.

Both the National Weather Service and private-sector weather forecasters predicted above-normal temperatures for most of the U.S. through the end of June.

Hotter temperatures send prices rising on sentiments that demand for natural gas will increase at the country's thermal power plants as businesses and households crank up their air conditioning.

Natural gas accounts for about a quarter of U.S. electricity generation.

Meanwhile, traders kept an eye out towards U.S. supply levels due for release on Thursday.
Total U.S. natural gas storage stood 2.347 trillion cubic feet as of last week, 2% below the five-year average for this time of year.

Early injection estimates for this week’s storage data range from 83 billion cubic feet to 95 billion cubic feet, compared to a 63 billion cubic feet increase during the same week a year earlier.

The five-year average for the week is a build of 80 billion cubic feet.

Elsewhere, Tropical Depression 2 emerged in the gas-rich Gulf of Mexico and threatened to strengthen into a Tropical Storm, which gave prices some support thought the system will likely remain in the extreme southern reaches of the energy-rich body of water.

Tropical weather systems often disrupt production in the Gulf of Mexico and send prices rising.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in August were down 0.13% and trading at USD98.54 a barrel, while heating oil futures for July delivery were up 0.19% at USD2.9674 per gallon.
















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