NEW YORK: US natural gas futures jumped about 5% to a four-week high on Monday on a decline in output and forecasts for hotter weather next week than previously expected that should boost the amount of gas power generators burn to keep air conditioners humming.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 10.1 cents, or 4.8%, to $2.224 per million British thermal units (mmBtu) at 12:12 p.m. EDT (1612 GMT), putting the contract on track for its highest close since July 22.
That price increase came even though there was still about 13% more gas in storage than is normal for this time of year.
Storage builds, including last week’s rare August withdrawal, have been smaller than normal in 13 of the past 14 weeks because several producers cut output earlier in the year after futures prices dropped to 3-1/2-year lows in February and March.
The storage decline during the week ended Aug. 9 was the first weekly withdrawal in August since 2006.
Higher prices in April and May prompted some drillers, including EQT and Chesapeake Energy, to start boosting output again. But after prices dropped 22% in July, some analysts said producers could keep their drilling activities reduced for longer.
EQT is the nation’s biggest gas producer and Chesapeake is on track to become the biggest after its planned merger with Southwestern Energy.
Comments
Comments are closed for this article.