US Natural Gas Prices Surge on Unseasonable Heat
US natural gas futures rose for the fourth consecutive week due to unseasonably warm weather boosting cooling demand. The front-month contract on the New York Mercantile Exchange settled 2.1% higher at $2.975 per million British thermal units (mmBtu). This marks a 2.4% gain for the week.
The warm temperatures, particularly in the Midwest and eastern US, led to increased demand for power generation, with gas-fired plants burning more fuel than usual to keep air conditioners running. According to analysts at consulting firm Gelber & Associates, 'the gradual up-trend of the past month... driven by unusually hot late summer temperatures, could continue in the coming weeks.'
The US Energy Information Administration reported that energy firms added 30 billion cubic feet of gas to storage during the week ended August 28. This increase is in line with analysts' forecasts and compares favorably to last year's build of 50 bcf and a five-year average of 37 bcf for the same period.
LSEG data shows that average gas output in the US Lower 48 states rose to 112.9 billion cubic feet per day (bcfd) so far in September, while projected average gas demand is expected to decline next week from this week's level of 109.7 bcfd.