Natural gas futures rose for a third day in four as weather forecasts continued to point at above-average temperatures across the U.S. Midwest, boosting demand for the power plant fuel.
On the New York Mercantile Exchange, natural gas for September delivery rose by 0.56% to $3.480 per million British thermal units at 9:11 GMT. Prices held in range between days high and low of $3.484 and $3.452 per mBtu respectively. The fuel surged 1.15% on Wednesday, extending its weekly advance to 3.2% after gaining 4.5% the preceding week.
Natural gas rose for a third day in four as forecasters continued to predict hotter-than-usual weather from the Great Lakes to Montana. According to MDA Weather Services, temperatures will rise to the low 90s Fahrenheit (low 30s degrees Celsius) between August 26 and August 30. AccuWeather Inc. reported temperatures in Chicago may peak at 91 degrees Fahrenheit on August 29, 10 above average, while temperatures in New York may surge to 89 degrees, 9 above normal.
When higher-than-normal temperatures are 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.
Market players are awaiting this week’s natural gas inventories report by the EIA. According to a Bloomberg survey, early injection estimates for last week’s build stand at 67 billion cubic feet, well above last year’s and the five-year average builds at 43 billion and 56 billion cubic feet respectively.
Last week, 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 year’s 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 week’s 0.7%, which marked the first surplus since March. The build was well over the five-year average and preceding year’s gain, but outperformed expectations.
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