NEW YORK: US natural gas futures rose on Tuesday as hot weather forecasts in August are expected to boost air-conditioning demand, prompting more gas use by power generators, while technical buying ahead of the August contract expiration added further support.
Front-month gas futures for August delivery on the New York Mercantile Exchange were up 7.3 cents, or 2.4%, to $3.06 per million British thermal units at 09:21 a.m. EDT. The contract hit its lowest level since late April in the previous session. The August contract expires on Tuesday.
“We are seeing some profit-taking by short sellers this morning after several sessions of downward pressure pushed the market into an oversold stance.
There is also some support for cash prices as August ends its run at the top of the board from immediate-term weather which has power sector demands elevated,” said Gary Cunningham, director of market research at Tradition Energy.
“Some heat starting to creep onto the 11-15 day outlooks could give the bulls a reason to come out of hiding, but it needs to intensify before it is worthy of a true rally in prices.”
Financial firm LSEG forecast average gas demand in the Lower 48, including exports, jumping from 106 bcfd last week to 112 bcfd this week. It also estimated 239 cooling degree days over the next two weeks, up from 232 estimated on Monday.
CDDs, used to estimate demand to cool homes and businesses, measure the number of degrees a day’s average temperature is above 65 degrees Fahrenheit (18.3 degrees Celsius).
“A hot summer is likely for North America. Warmth during June-August could be widespread in nature except over the Northeast US, with the most intense heat risks focused on the central US,” said Isaac Hankes, research specialist at LSEG Data and Analytics.
LSEG said average gas output in the Lower 48 has risen to 107.5 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June.
Meanwhile, oil and gas equipment supplier Baker Hughes said on Tuesday it would acquire Chart Industries in a $13.6 billion all-cash deal, including debt, edging out rival suitor Flowserve.
Elsewhere, Dutch and British wholesale gas prices rose slightly on Tuesday morning, trading in a narrow range, on strong supply and remarks from US President Trump suggesting a shortened deadline for Russia to agree to a ceasefire in Ukraine.
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