NEW YORK: US natural gas futures rose to a 14-week high on Tuesday on forecasts for warmer than previously expected weather over the next two weeks that should boost the amount of gas power generators burn to keep air conditioners humming.
Traders also noted that output was on track to decline at the same time soaring global gas prices pushed US exports to near record highs.
Front-month gas futures rose 15.1 cents, or 5.1%, to $3.137 per million British thermal units (mmBtu) by 10:05 a.m. EDT (1405 GMT), putting the contract on track for its highest close since Feb. 17.
Despite the big gain on Tuesday, speculators last week boosted their futures and options shorts on the New York Mercantile Exchange (NYMEX) to the highest since July 2020 because forecasts then were calling for mild weather through mid June. That helped cause the first drop in speculative net long positions on the NYMEX and Intercontinental Exchanges in four weeks.
Data provider Refinitiv said gas output in the Lower 48 US states slipped to a preliminary 89.7 billion cubic feet per day (bcfd) on the first day of June, down from an average of 91.0 bcfd in May. That compares with a monthly record high of 95.4 bcfd in November 2019.
With warmer weather coming, Refinitiv projected average gas demand, including exports, would rise from 85.4 bcfd this week to 90.2 bcfd next week. The forecast for this week was higher than Refinitiv predicted on Friday before the long US Memorial Day weekend.