Natural Gas Prices Surge Ahead of August Contract Expiration

Natural gas prices rebounded on Wednesday, closing up 2.37% to settle higher amid fund short covering as it was the last trading day for the August Nymex natural gas futures contract.

The price increase came despite weather models showing a cooler Midwest and East Coast in the near term, reducing the need for air conditioning.

However, this is expected to be temporary, as forecasts call for normal to below-normal temperatures across the central and eastern US through August 7, according to the Commodity Weather Group.

A bearish factor for natural gas prices in the medium term is speculation that a powerful El Niño weather system will bring warmer-than-normal temperatures to the Northern Hemisphere this fall and winter, reducing natural gas heating demand.