Natural gas futures rose for the sixth time in seven days as forecasts for higher-than-normal temperatures indicated stronger demand for the power-plant fuel.
Electricity use for air conditioning will be 26 percent above normal today throughout the U.S., and will stay above normal through August 10, David Salmon, a meteorologist with Weather Derivatives of Belton, Missouri, said in a daily report.
“It’s a little bounce,” said Kyle Cooper, managing director at energy consultant IAF Advisors in Houston. “We remain range bound between $4.50 and $5 until we get more into the meat of the hurricane season.”
Natural gas for September delivery rose 7.9 cents, or 1.7 percent, to $4.78 per million British thermal units at 12:09 a.m. on the New York Mercantile Exchange. The fuel declined 4.5 percent yesterday, the biggest drop since April 29.
“Yesterday it was too much for gas to break $5 and hold it,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “It wasn’t able to keep going.”
Gas rose to $5.007 early yesterday, surpassing $5 for the first time since June 21.
Temperatures in New York are forecast to reach a high of 88 degrees Fahrenheit (31 Celsius) today, compared with an average high of 84, according to the National Weather Service. Chicago is predicted to reach a high of 87, compared with an average high of 83.
Tropical storm Colin, approaching the southeastern Caribbean Sea from the Atlantic, was upgraded from a tropical depression, the National Hurricane Center said today. The system, with maximum sustained winds of 40 miles (65 kilometers) an hour, is about 945 miles east of the Lesser Antilles islands moving west-northwest at 23 mph, the center said on its website.
“If anything, it looks like it’s going to be a bearish event,” Cooper said. It’s probably not going to come into the Gulf of Mexico. It’ll probably stay out in the Atlantic or skim the East Coast, which will bring lower temperatures and rain.”
Weather models predict the storm will not reach the Gulf of Mexico, Cooper said. If an active storm season does not impact the Gulf this year, fuel prices will fall. Hot weather and storms have been outweighing the impact of economic news on gas prices, Cooper said.
Orders placed with U.S. factories declined more than forecast in June, a sign manufacturing will cool in coming months, a Commerce Department report today showed. The 1.2 percent decrease in bookings was higher than the 0.5 percent drop projected by the median forecast of economists in a Bloomberg News survey and followed a revised 1.8 percent decline in May.
Gas prices have dropped 14 percent this year amid speculation that inventories will reach near-record highs by the end of October, as a recovering economy puts little pressure on a stockpile surplus.
Supplies climbed 28 billion cubic feet to 2.919 trillion in the week ended July 23, according to an Energy Department report on July 29.
Gas inventories at the end of October 2010 will reach 3.81 trillion cubic feet, the Energy Department estimated in its monthly Short-Term Energy Outlook on July 7. Stockpiles rose to a record 3.84 trillion cubic feet in November 2009.
To contact the reporter on this story: Asjylyn Loder in New York at email@example.com.