Natural Gas Advances a Second Day as Midwest Heats Up

Natural gas futures in New York climbed the most in three weeks as forecasts showed hotter-than-normal U.S. weather that would boost demand for the power-plant fuel after the coolest July in five years.

Temperatures may be higher than average in the central and southern U.S. through Aug. 23, according to MDA Weather Services in Gaithersburg, Maryland. The average July temperature was 73.3 degrees Fahrenheit (23 Celsius) in the contiguous U.S., the lowest since 2009, government data show.

“We have some heat in the Midwest that may seep into the East Coast by the end of the month,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It looks like it’s going to be a brief warm-up, but every little bit counts.”

Natural gas for September delivery rose 8.5 cents, or 2.2 percent, to settle at $3.877 per million British thermal units on the New York Mercantile Exchange. The percentage gain was the biggest since July 24. Volume for all futures traded was 9.2 percent above the 100-day average at 2:58 p.m. Prices are up 12 percent from a year ago.

The high in St. Louis on Aug. 22 may be 96 degrees Fahrenheit, 9 higher than average, according to AccuWeather Inc. in State College, Pennsylvania. Dallas may reach 98 degrees, 2 more than usual.

Power plants account for 31 percent of gas demand, according to the U.S. Energy Information Administration. The agency is the Energy Department’s statistical arm.

“The market can reasonably expect stronger-than-normal cooling demand in a population-rich environment for the first time this summer,” Aaron Calder, an analyst at Gelber & Associates in Houston, said in a note to clients today.

Power Plants

Gas deliveries to electricity generators surged 21 percent since June 21 to 28 billion cubic feet yesterday, according to LCI Energy Insight in El Paso, Texas.

Stockpiles of natural gas were 19 percent below the five-year average on Aug. 8, the biggest deficit for the time of year since at least 2005. EIA data scheduled for release Aug. 21 may show inventories rose 82 billion cubic feet in the week ended Aug. 15, compared with the five-year average gain of 48 billion for the period, according to the median of five analyst estimates compiled by Bloomberg.

U.S. gas consumption may climb 1.7 percent this year to 72.6 billion cubic feet a day, led by industrial users, the EIA said Aug. 12 in its monthly Short-Term Energy Outlook report. Inventories may total 3.463 trillion cubic feet at the end of October, the lowest start to the peak heating season since 2008.

To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Bill Banker, Charlotte Porter

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