Natural gas futures rose from a seven-month low in New York as forecasts showed a shift to hotter weather after below-normal temperatures this week.
The weather may be warmer than usual in most of the contiguous U.S. from July 23 through July 27, according to MDA Weather Services. Prices tumbled below $4 per million British thermal units yesterday for the first time since Jan. 10 after government data showed a 13th straight larger-than-normal increase in gas stockpiles.
"We still have two months of summer left," said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. "Unless we really don’t get any cooling demand, the market should start to find support."
Natural gas for August delivery rose 0.5 cent to $3.959 per million British thermal units at 9:48 a.m. on the New York Mercantile Exchange. Volume for all futures traded was 8.1 percent below the 100-day average. Gas slid to $3.936 per million Btu in intraday trading yesterday, the lowest since Dec. 2. Prices are up 3.9 percent from a year ago.
The high in St. Louis on July 23 may be 93 degrees Fahrenheit (34 Celsius), 5 more than average, according to AccuWeather Inc. in State College, Pennsylvania. Philadelphia temperatures may also reach 93 degrees, 6 above normal.
Power plants account for 31 percent of gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.
Gas stockpiles were 26 percent below the five-year average in the week ended July 11, the biggest deficit since at least 2005 for the time of year, EIA data show. Inventories totaled 2.129 trillion cubic feet, the lowest since 2003 for the period.
Demand may grow 1.5 percent this year to 72.37 billion cubic feet a day, led by industrial users, the EIA said July 8 in its monthly Short-Term Energy Outlook. The agency boosted its forecast for average 2014 natural gas prices to $4.77 per million Btu from $4.74 in last month’s report.