Natural gas futures rose for the first time in six days after reports showed rising consumer confidence and chances for an active hurricane season.
The Conference Board’s confidence index rose to 63.3, the highest level since March 2008. The hurricane season, which runs from June through November, will be more active than last year, according to Tropical Storm Risk. About 11 percent of U.S. gas is pumped on Federal leases in the Gulf of Mexico.
“The consumers are somewhat optimistic about the future, and more likely to spend,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “That definitely bodes well for the industrial sector in the United States.”
Natural gas for June delivery rose 3.4 cents, or 0.9 percent, to settle at $4.051 per million British thermal units on the New York Mercantile Exchange. The futures have declined 27 percent this year.
The U.S. may continue to show a strengthening economy and increasing industrial demand for the power-plant fuel as long as the sovereign debt crisis in Greece doesn’t have a “domino effect” throughout Europe, Jarvis said. Industrial gas purchases account for about 29 percent of consumption.
“It’s a very difficult period of time to be short natural gas with hurricane season right ahead of us,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida.
Crisis in Europe
Concern that the European debt crisis will undermine a U.S. recovery has made some investors nervous, Rose said. Gas fell as low as $3.986 per million Btu in earlier trading. Crude fell $1.46, or 2.1 percent, to settle at $68.75 a barrel on the New York exchange.
The 2010 hurricane season in the Atlantic will be “active” and produce 16 tropical storms, including eight hurricanes, four of those being intense, Tropical Storm Risk said today. There’s a 74 percent chance that more storms than normal will hit the continental U.S.
At least two hurricanes and three tropical storms will hit the U.S., the British forecaster said. In a typical year, an average of three tropical storms and 1.5 hurricanes make landfall, said the forecaster, which is affiliated with University College London and is co-sponsored by the insurers Aon Benfield, RSA Insurance Group Plc and Crawford & Co.
Traders are looking to reports this week on U.S. home sales, consumer confidence, unemployment and inventories to gauge whether the economy is strengthening or if the European sovereign debt crisis has undermined a recovery, Peter Beutel, president of Cameron Hanover Inc., a trading adviser in New Canaan, Connecticut, said in a daily report.
“It might not be an overstatement to suggest that this week’s economic data could spell the difference between a recovery this year and a double-dip recession,” Beutel said.
The S&P/Case-Shiller home-price index of property values in 20 cities increased 2.3 percent in March from a year earlier, a report today showed. The median forecast of economists surveyed by Bloomberg News projected a 2.5 percent advance.
Gas stockpiles rose 76 billion cubic feet the week ended May 14 to 2.165 trillion cubic feet, 17 percent above the five-year average, an Energy Department report last week showed. Supplies increased to a record last year.
The number of natural-gas rigs climbed in the week ended May 21 by 18, or 1.9 percent, to 969, the biggest increase since the week ended March 5. The rig total is four below the one-year high of 973 set on April 16.
“We’re just holding that $4 range; the fundamentals tell me it should go lower, but I guess there’s enough concern that hurricane season is around the corner and cooling season is here in a matter of weeks,” said Mike Fitzpatrick, vice president of MF Global in New York. “Gas is all about weather and supply.”
Hot weather forecast for this week may boost demand for gas from power plants.
Air conditioning in the Northeast and north-central region will be above normal through May 27, David Salmon, a meteorologist with Weather Derivatives of Belton, Missouri, said in a daily report.
Cooling demand in New York City is forecast to be more than four times higher than normal on May 27, Salmon said in the report.
Temperatures in New York will reach 86 degrees Fahrenheit (30 Celsius) today, compared with an average high of 74 degrees, according to the National Weather Service. Chicago is forecast to reach a high of 84 today, up from an average of 73.
“Air conditioning usage will continue high into next week,” Salmon said.
Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, rose 0.16 cent to $4.0801 per million Btu, according to data compiled by Bloomberg.
Gas futures volume in electronic trading on the Nymex was 147,205 as of 2:51 p.m., compared with a three-month average total of 236,000. Volume was 196,066 yesterday. Open interest was 860,059 contracts, compared with the three-month average of 851,000. The exchange has a one-business-day delay in reporting open interest and full volume data.