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Natural Gas Futures Rise in Survey on Outlook for Midwest Heat

Natural gas futures may gain next week on speculation that late-summer heat in the Midwest will stoke fuel demand from electricity producers.

Six of 13 analysts, or 46 percent, predicted that futures will rise on the New York Mercantile Exchange through Aug. 30. Four, or 31 percent, said gas will fall and three predicted prices will stay the same. Last week, 53 percent of participants said gas would advance.

The Midwest may see temperatures near the highest of the year next week while readings may be above normal in the mid-Atlantic states, according to Commodity Weather Group LLC in Bethesda, Maryland. Gas prices climbed 2.9 percent in August through yesterday following lower-than-forecast supply gains the previous two weeks.

“If this weather that’s being projected actually materializes and we do get this heat wave in the next couple of weeks, we will see this trend lower in injections over that time frame,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “If it gets really, really hot, we could see gas pushing toward $4.”

Natural gas futures jumped 17.7 cents, or 5.3 percent, to $3.545 per million British thermal units during the first four days of this week on the Nymex. Yesterday’s close was the highest settlement since July 26 and prices are heading for a second straight weekly gain. The futures are up 5.8 percent this so far year.

Hot Weather

The high in Minneapolis on Aug. 26 may be 94 degrees Fahrenheit (34 Celsius), 15 above normal, and Chicago’s reading four days later may be 10 higher than the average at 90 degrees, according to AccuWeather Inc. in State College, Pennsylvania. Temperatures in Manhattan on Aug. 30 may be 91, 11 degrees above the norm.

Power producers account for 32 percent of U.S. gas demand, according to the Energy Information Administration, the Energy Department’s statistical arm.

U.S. inventories expanded by 57 billion cubic feet in the week ended Aug. 16 to 3.063 trillion, the EIA said yesterday. Analyst estimates compiled by Bloomberg predicted a gain of 65 billion. The five-year average increase for the period is 56 billion. A supply surplus to the average held at 1.5 percent.

The gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:


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