US natural gas futures rose on Wednesday to the highest in nearly a month on forecasts for warmer-than-normal weather that could boost cooling demand and on short-covering before the expiration of the September contract.
On its last day as the front-month, gas futures for September delivery rose 4.9 cents, or 2.2pc, to $2.251 per million British thermal units. Prices has earlier touched their highest since Aug. 1 at $2.277.
Analysts said short covering ahead of the expiration of the September contract and hotter weather forecasts are supporting the natural gas market.
"October is typically a shoulder month, so too much extreme weather is not expected, the focus will be on the winter weather outlook," said Thomas Saal, senior vice president of energy at INTL FCStone.
"I am a little on the bullish side because the speculators are significantly net short and the only way to make profit on short positions is to buy it back."
Refinitiv data indicated 165 cooling degree days (CDDs) in the lower 48 states over the next two weeks. The normal is 150 CDDs for this time of year.
CDDs measure the number of degrees a day's average temperature is above 65 degrees Fahrenheit (18 degrees Celsius) and are used to estimate demand to cool homes and businesses.
Investors were also keeping a close eye on Tropical Storm Dorian, which is expected to dump 4 to 8 inches of rain on Florida when it reaches the state, the National Hurricane Center (NHC) said on Wednesday.
Meanwhile, gas production in the lower 48 US states fell to 91.8 billion cubic feet per day (bcfd) on Tuesday from 92.4 bcfd on Monday, Refinitiv data showed. This compares to an all-time high of 92.5 bcfd scaled on Aug. 19.
Analysts said gas futures had traded near multi-year lows since May because record output and mild spring weather allowed utilities to inject huge amounts of gas into storage.
The amount of gas in inventory has remained below the five-year average since September 2017.
It fell as low as 33pc below that average in March 2019.
But with production expected to keep growing, analysts said, stockpiles should reach a near-normal 3.7 trillion cubic feet (tcf) by the end of the summer injection season on Oct. 31.