U.S. natural gas climbs to 2-week high with warm weather in focus

Commodities

U.S. natural gas futures rose for the second day in a row on Tuesday, as forecasts for warmer than normal temperatures across most parts of the continental U.S. in the days ahead boosted demand expectations for the cooling fuel.

Natural gas for delivery in September on the New York Mercantile Exchange touched an intraday peak of $2.740 per million British thermal units, the most since August 9.

It was last at $2.722 by 10:35AM ET (14:35GMT), up 4.3 cents, or 1.61%.

On Monday, futures soared 9.5 cents, or 3.68%, as traders reacted to forecasts for scorching heat across most of the country through September 5.

According to AccuWeather, the high in Washington DC on September 1 is expected to be 87 degrees Fahrenheit (31 Celsius), three more than normal.

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.

Meanwhile, market players looked ahead to weekly supply data due on Thursday, which is expected to show a build of approximately 24 billion cubic feet.

That compares with a gain of 22 billion cubic feet in the preceding week, 67 billion a year earlier and a five-year average of 66 billion cubic feet.

Total U.S. natural gas storage currently stands at 3.339 trillion cubic feet, according to the U.S. Energy Information Administration, 10.9% higher than levels at this time a year ago and 13.8% above the five-year average for this time of year.

Natural gas futures have recently been under heavy selling pressure amid speculation that August heat won’t prevent stockpiles from reaching a record before the winter.

Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.

Source by Investing.com