NEW YORK: US natural gas futures climbed about 2% on Thursday on a smaller-than-expected storage build, recent declines in daily output and an increase in gas flows to liquefied natural gas (LNG) export plants.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 4.6 cents, or 1.7%, to $2.798 per million British thermal units (mmBtu) at 10:34 a.m. EDT (1434 GMT). On Wednesday, the contract closed at its lowest since November 8 for a second day in a row.
Thursday’s price increase pushed the contract out of technically oversold territory.
The US Energy Information Administration (EIA) said energy firms added 13 billion cubic feet (bcf) of gas into storage during the week ended August 15.
That was smaller than the 22-bcf build analysts forecast in a Reuters poll and compares with an increase of 29 bcf during the same week last year and an average build of 35 bcf over the 2020 to 2024 period.
Analysts said the build was smaller-than-usual due to increased cooling demand during hot weather last week.
Looking forward, traders are showing signs that they are not worried about having enough gas supplies for this winter, with the premium of futures for March over April 2026 on track to fall to a record low of around 13 cents per mmBtu.
The industry calls the March-April spread the “widow maker” because rapid price moves resulting from changing weather forecasts have forced some speculators out of business, including the Amaranth hedge fund, which lost more than $6 billion in 2006.
Traders use the March-April and October-November spreads to bet on winter weather forecasts and supply and demand. March is the last month of the winter-heating season when utilities pull gas out of storage, and October is the last month of the summer cooling season when utilities inject gas into storage.
Comments
Comments are closed for this article.