According to a Bloomberg survey, natural gas prices will probably advance next week as weather forecasting models point at hotter weather, thus improving the fuels demand outlook.
On the New York Mercantile Exchange, natural gas for September delivery fell to $3.371 per million British thermal units at 13:58 GMT, down 1.42% on the day. Prices ranged between days high at $3.434, the highest since August 1, and days low of $3.362 per Mmbtu. The fuel rose 2.29% on Thursday following EIAs weekly natural gas storage report and extended current weeks advance to little over 4.5% after trimming some of its gains on Friday.
Natural gas is expected to rally next week, according to a Bloomberg survey of analysts. Eight out of 15 participants in the poll, or 53%, wagered that prices will rise through August 23, while six, or 40%, predicted it will remain unchanged and one expected a decline. Last weeks survey showed that 62% of the analysts questioned projected a fall this week.
According to MDA Weather Services in Gaithersburg, Maryland, above-normal temperatures are expected across the key consuming Northeast and Midwest areas between August 20 and August 24. AccuWeather Inc. reported that temperatures in Boston on August 23 may peak at 89 degrees Fahrenheit, 10 above normal, while temperatures in Kansas City may rise to 93 degrees Fahrenheit, 5 above average.
When warmer-than-normal weather is expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of the U.S. electricity generation. According to the Energy Information Administration, power generation accounts for 32% of U.S. gas demand.
Yesterday, the Energy Information Administration reported that U.S. natural gas stockpiles rose less than expected in the week ending August 9. The government agency said that inventories rose by 65 billion cubic feet to 3.006 trillion cubic feet, which was less than the previous years total 3.258 trillion cubic feet of gas held in underground storage hubs. At the same time, the surplus over the five-year average 2 963 billion cubic feet widened to 1.5% from the preceding weeks 0.7%, which marked the first surplus since March.
Last weeks build was well above the previous year’s 20 billion increase during the comparable week and the five-year average gain of 42 billion cubic feet. The increase however outperformed analysts expectations, which resulted in a strong daily surge of 2.3%. According to a survey by Platts, the energy information arm of McGraw-Hill Cos., analysts expected a surge in stockpiles in range between 68 billion and 72 billion cubic feet.
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