2023-07-20 17:50:37 ET
U.S. natural gas futures jumped nearly 6% to a three-week high Thursday following a smaller than expected storage build and forecasts for hotter than normal weather through early August.
The Energy Information Administration reported U.S. natural gas supplies in storage rose by 41B cf for the week ended July 14, below the 48B cf consensus forecast and compared with an increase of 35B cf in the same week last year and a five-year (2018-22) average increase of 45B cf.
Last week's increase boosted stockpiles to 2.97T cf, or 13.8% above the five-year average of 2.61T cf for this time of year.
Front-month Nymex natural gas ( NG1:COM ) for August delivery closed +5.9% to $2.757/MMBtu, its best settlement value since June 30; the contract is now up 38% from its 2023 settlement low of $1.991/MMBtu on March 2.
ETFs: ( NYSEARCA: UNG ), ( UGAZF ), ( BOIL ), ( KOLD ), ( UNL ), ( FCG )
Meanwhile, the latest U.S. forecasts are calling for above-normal temperatures in much of the country during the next 6-10 days.
Extreme heat boosts the amount of gas generators burn to produce power for cooling, especially in Texas, which gets most of its electricity from gas-fired plants.
"If the heat holds up into August like some predict, and because we're seeing a consistent drop in the U.S. rig count, this winter could be more expensive than previously thought by the marketplace," Price Futures Group's Phil Flynn said.
More on natural gas:
- UNG: Collapsing Natural Gas Rig Count Confirms Supply Crunch
- UNG: The Coming Rise In Natural Gas Prices
- UNG: Hot Weather From El Niño Expected To Boost Gas Demand
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U.S. natgas surges after small storage build, continued blazing temps