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Natural gas futures bounce off 3-week low on hot U.S. weather

Published 08/01/2011, 10:57 AM
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Investing.com – Natural gas futures were up for the first time in six days on Monday, bouncing off a three-week low as demand expectations for the fuel were boosted after forecasts showed hotter-than-normal temperatures were expected across most parts of the U.S. in the upcoming week. 
 
On the New York Mercantile Exchange, natural gas futures for September delivery traded at USD4.189 per million British thermal units during U.S. morning trade, jumping 0.9%.

It earlier rose as much as 1.1% to trade at a daily high of USD4.204 per million British thermal units.

The Commodity Weather Group said earlier that large parts of the U.S. East and Midwest could see temperatures well above-normal through August 10.

The weather group added that, "The southern sections of the Central U.S. could see one of its hottest weeks ever with frequent records set in Texas, the Southern Plains, and nearby areas of the Deep South."

According to weather service provider AccuWeather, temperatures in parts of Kansas, Oklahoma and Texas rose above 100 degrees Fahrenheit over the weekend.

Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning. 

Natural gas prices found further support after the U.S. National Weather Service said earlier that a low pressure storm system moving west toward the islands of the eastern Caribbean has a 90% chance of developing into a tropical cyclone during the next 48 hours.

The storm advisory comes a day after the U.S. National Hurricane Center said that Tropical Storm Eugene could strengthen to become a hurricane within the next 48 hours, as it headed west-northwest over open water in the Gulf of Mexico.

Energy traders track tropical storm activity in the event it disrupts production in the Gulf of Mexico, which is home to 10% of U.S. natural gas production.

Elsewhere on the Nymex, light sweet crude oil futures for delivery in September fell 0.75% to trade at USD95.25 a barrel, while heating oil for September delivery shed 0.13% to trade at USD3.097 per gallon during U.S. morning trade.

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