Natural Gas Prices Higher Due to Sticky Weather

by editor2
August 9th, 2006

Natural gas prices rose Tuesday after an 11 percent decline over the past three sessions on expectations that hot weather last week had forced utilities to take the rare step of tapping underground storage caverns.

U.S. natural gas stockpiles may have declined as sweltering weather led to increased use of air-conditioners and more gas consumption by electric generators. Stockpiles typically expand during summer in an effort to bulk up for winter, when demand peaks.

“There’s concern that Thursday’s EIA report could be another bullish report after last week’s heat wave,” said Brad Florer, a broker at ICAP Energy in Louisville, Kentucky, referring to a report on supplies from the U.S. Energy Information Administration.

Gas for September delivery gained 25.1 cents to $7.16 per million British thermal units on the New York Mercantile Exchange.

Gas inventories may have dropped last week for the second time ever in summer, some analysts said. Temperatures last week soared from Chicago to New York, increasing the amount of natural gas burned in power generators.

Temperatures reached at least 100 degrees Fahrenheit (38 degrees Celsius) for three consecutive days in New York, the hottest stretch in five years.

U.S. utilities and manufacturers pulled natural gas from underground storage caverns last month, the first time that stockpiles had recorded a weekly decline in the summer months, government data dating back to 1994 show.

Gas stockpiles reached 2.775 trillion cubic feet last week, 15 percent above a year earlier and 19 percent higher than the average for the past five years. U.S. natural gas inventories are expected to peak at a record 3.443 trillion cubic feet at the end of October, the Energy Department said in its Short-Term Energy Outlook on Tuesday.

Meanwhile, gold futures for December delivery fell $2.20 to $657.30 an ounce on the Comex division of the New York peaks.

“There’s concern that Thursday’s EIA report could be another bullish report after last week’s heat wave,” said Brad Florer, a broker at ICAP Energy in Louisville, Kentucky, referring to a report on supplies from the U.S. Energy Information Administration.

Gas for September delivery gained 25.1 cents to $7.16 per million British thermal units on the New York Mercantile Exchange.

Gas inventories may have dropped last week for the second time ever in summer, some analysts said. Temperatures last week soared from Chicago to New York, increasing the amount of natural gas burned in power generators.

Temperatures reached at least 100 degrees Fahrenheit (38 degrees Celsius) for three consecutive days in New York, the hottest stretch in five years.

U.S. utilities and manufacturers pulled natural gas from underground storage caverns last month, the first time that stockpiles had recorded a weekly decline in the summer months, government data dating back to 1994 show.

Gas stockpiles reached 2.775 trillion cubic feet last week, 15 percent above a year earlier and 19 percent higher than the average for the past five years. U.S. natural gas inventories are expected to peak at a record 3.443 trillion cubic feet at the end of October, the Energy Department said in its Short-Term Energy Outlook on Tuesday.

Meanwhile, gold futures for December delivery fell $2.20 to $657.30 an ounce on the Comex division of the New York Mercantile Exchange.

Before Tuesday, gold had climbed 6.3 percent since July 24.