NEW YORK: US natural gas futures rose for a third day on Tuesday on forecasts for higher heating use over the next two weeks and expectations that a 31% jump in European gas prices will keep demand for US liquefied natural gas (LNG) exports strong.
In the last quarter of 2021, US gas futures followed the rise and fall of global prices about two-thirds of the time as utilities around the world bought LNG cargoes to replenish low stockpiles in Europe and meet surging demand in Asia.
Front-month gas futures rose 8.8 cents, or 2.3%, to $3.903 per million British thermal units at 9:00 a.m. EST (1400 GMT).
With global gas prices at record highs in late December, speculators last week boosted their net long positions on the New York Mercantile (NYMEX) and Intercontinental Exchanges by the most of any week since September, the US Commodity Futures Trading Commission’s Commitments of Traders report showed.
That increase in net longs came despite a drop in speculative long positions on the NYMEX to their lowest since April 2020.
More than 330,000 homes and businesses located mostly in Virginia were still without power Tuesday morning after a snow and ice storm battered the US East Coast from Georgia to Maryland earlier this week.
Although the snow storm blew out to sea, cold weather has blanketed the US Northeast, causing next-day gas prices in New York City to soar from $3.60 per mmBtu for Monday to $8.50 for Tuesday. That was the highest spot price in New York since last winter’s February freeze cut power and gas supplies in Texas and boosted energy costs to record highs in several parts of the country.
Even though gas prices in Europe have dropped by almost 50% since hitting all-time highs of around $60 per mmBtu in late December, global gas prices continue to trade about eight times higher than prices in the United States.
US futures followed that global gas price spike, reaching a 12-year high of more than $6 per mmBtu in early October, but have since retreated because the United States has plenty of gas in storage and ample production for the winter.
Analysts have said European gas inventories were about 20% below normal for this time of year, compared with about 1% above normal in the United States.
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