NEW YORK: US natural gas futures rose on Monday, supported by summer cooling demand and expectations for a smaller-than-normal storage build.
Front-month gas futures for September delivery on the New York Mercantile Exchange rose 3.5 cents, or 1.3percent, to USD2.81 per million British thermal units. Last week, the contract posted a weekly gain of around 1.5percent.
Futures for October, which will soon be the front-month contract, held around USD2.89 per mmBtu, after hitting their highest level since July 24 at USD2.891.
Traders are betting that strong demand could keep storage builds relatively modest, with the market looking for a repeat of last week’s smaller-than-expected injection, said Phil Flynn, senior market analyst at Price Futures Group. Meteorologists forecast mostly warmer-than-normal temperatures through September 7, as Cooling Degree Days stood at 194 on Monday compared to 126 last year. CDDs measure energy demand to cool buildings.
“While demand expectations have ramped up recently given above normal temperature expectations across most of the US through the first week of next month, this weather factor has had a smaller impact on storage levels than we previously expected,” consultancy Ritterbusch & Associates said in a note.
Financial group LSEG said average gas output in the US Lower 48 states has reached 111.5 billion cubic feet per day so far in August, up from a monthly record high of 110.7 bcfd in July.
Average gas flows to the nine big US LNG export plants stand at 17.1 bcfd so far in August, slightly down from 17.2 bcfd in July and a monthly record high of 17.4 bcfd in June.
LSEG projected average gas demand in the Lower 48 states, including exports, would slip slightly from 111.6 bcfd this week to 111.3 bcfd next week.
Elsewhere, Dutch and British gas prices were steady as Norwegian supply rose and the market waited for an expected announcement from Washington about imposing more sanctions on Iran.