Investing.com - Natural gas futures climbed to a one-week high Wednesday, as forecasts for extreme heat across most parts of the U.S. in the next two weeks continued to boost near-term demand expectations for the fuel.
Anticipation ran high for Friday’s closely-watched U.S. government report on natural gas supplies. The report comes out a day later than usual due to the Fourth of July holiday.
On the New York Mercantile Exchange, natural gas futures for delivery in August traded at USD2.932 per million British thermal units during U.S. morning trade, jumping 1.15%.
It earlier rose by as much as 1.45% to trade at USD2.938 per million British thermal units, the highest since June 27.
Trade volumes were expected to remain light on Wednesday, with NYMEX floor trading and U.S. equity markets closed for the Independence Day holiday.
A bout of hot weather across much of the country over the last several weeks has helped boost natural gas prices. The August contract rallied to USD2.971 on June 27, the highest since January 10.
But market participants have warned that prices were expected to face strong resistance as they approach the USD3.00-level, where gas loses its appeal over coal for power generation.
Prices in recent days have been buoyed by forecasts showing extremely warmer-than-normal weather across most parts of the U.S. in the coming two weeks.
Forecaster MDA EarthSat predicted temperatures "near or above 100 Fahrenheit" in St. Louis in the next six to 10 days, as above-normal temperatures sweep across much of the Midwest and Northeast.
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.
Meanwhile, market players shifted their focus to the U.S. Energy Information Administration’s closely-watched weekly report on natural gas inventories scheduled for Friday.
Early injection estimates range from 39 billion cubic feet to 55 billion cubic feet, compared to last year's build of 90 billion cubic feet. The five-year average change for the week is an increase of 79 billion cubic feet.
The U.S. EIA said last week that natural gas storage in the U.S. rose by 57 billion cubic feet to 3.063 trillion cubic feet last week, 27% above last year's level and 25% above the five-year average level for that week.
U.S. gas inventories did not hit the milestone 3 trillion cubic feet level until August 31 of last year. Lingering concerns over rising U.S. inventories were likely to continue to weigh on prices.
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.
The storage surplus to last year will have to be cut by at least another 405 billion cubic feet in the 20 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity.
Natural gas prices are up nearly 45% since touching a decade-low of USD1.902 on April 19.
Indications that North American gas producers were cutting back on production in response to lower prices provided support in recent months.
Industry group Baker Hughes said last week that the number of active rigs drilling for natural gas in the U.S. fell by 7 to 534, the lowest since September 1999.
The gas rig count is 43% below last year’s level, fuelling hopes that major North American natural gas producers were beginning to curb output in response to declining prices.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas boosted the commodity, but market players noted that sustained prices back above USD2.50 and toward the USD3.00-level likely would inspire some switching back to coal.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in August fell 0.68% to trade at USD87.06 a barrel.
Anticipation ran high for Friday’s closely-watched U.S. government report on natural gas supplies. The report comes out a day later than usual due to the Fourth of July holiday.
On the New York Mercantile Exchange, natural gas futures for delivery in August traded at USD2.932 per million British thermal units during U.S. morning trade, jumping 1.15%.
It earlier rose by as much as 1.45% to trade at USD2.938 per million British thermal units, the highest since June 27.
Trade volumes were expected to remain light on Wednesday, with NYMEX floor trading and U.S. equity markets closed for the Independence Day holiday.
A bout of hot weather across much of the country over the last several weeks has helped boost natural gas prices. The August contract rallied to USD2.971 on June 27, the highest since January 10.
But market participants have warned that prices were expected to face strong resistance as they approach the USD3.00-level, where gas loses its appeal over coal for power generation.
Prices in recent days have been buoyed by forecasts showing extremely warmer-than-normal weather across most parts of the U.S. in the coming two weeks.
Forecaster MDA EarthSat predicted temperatures "near or above 100 Fahrenheit" in St. Louis in the next six to 10 days, as above-normal temperatures sweep across much of the Midwest and Northeast.
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.
Meanwhile, market players shifted their focus to the U.S. Energy Information Administration’s closely-watched weekly report on natural gas inventories scheduled for Friday.
Early injection estimates range from 39 billion cubic feet to 55 billion cubic feet, compared to last year's build of 90 billion cubic feet. The five-year average change for the week is an increase of 79 billion cubic feet.
The U.S. EIA said last week that natural gas storage in the U.S. rose by 57 billion cubic feet to 3.063 trillion cubic feet last week, 27% above last year's level and 25% above the five-year average level for that week.
U.S. gas inventories did not hit the milestone 3 trillion cubic feet level until August 31 of last year. Lingering concerns over rising U.S. inventories were likely to continue to weigh on prices.
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.
The storage surplus to last year will have to be cut by at least another 405 billion cubic feet in the 20 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity.
Natural gas prices are up nearly 45% since touching a decade-low of USD1.902 on April 19.
Indications that North American gas producers were cutting back on production in response to lower prices provided support in recent months.
Industry group Baker Hughes said last week that the number of active rigs drilling for natural gas in the U.S. fell by 7 to 534, the lowest since September 1999.
The gas rig count is 43% below last year’s level, fuelling hopes that major North American natural gas producers were beginning to curb output in response to declining prices.
Speculation that utility providers in the U.S. were switching from pricier coal to cheaper natural gas boosted the commodity, but market players noted that sustained prices back above USD2.50 and toward the USD3.00-level likely would inspire some switching back to coal.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in August fell 0.68% to trade at USD87.06 a barrel.