Natural gas futures advanced for a second day in New York on forecasts for above-normal temperatures that would boost demand from power plants.
The weather may be hotter than usual across most of the contiguous U.S. from May 4 through May 13, according to MDA Weather Services in Gaithersburg, Maryland. Gas deliveries to electricity generators for the year through Tuesday rose 11 percent to 22.8 billion cubic feet a day, according to LCI Energy Insight in El Paso, Texas.
“We’re getting some pretty good weather demand, which is supporting the market,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Fuel-switching from coal at power plants is kicking in and saving the market from falling apart.”
Natural gas for June delivery rose 6.9 cents, or 2.7 percent, to settle at $2.606 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 33 percent below the 100-day average at 2:43 p.m. Prices are down 9.8 percent this year. Gas slumped to $2.49 on Monday, the lowest settlement since June 2012.
The high in Washington on May 5 may be 86 degrees Fahrenheit (30 Celsius), 14 more than average, AccuWeather Inc. said on its website. New York temperatures may climb to 81 degrees, 13 above normal.
Power plants account for 32 percent of gas demand in the U.S., Energy Information Administration data show.
“At prices below $2.75, power-generation demand will be steady and ever-present,” Aaron Calder, an analyst at Gelber & Associates in Houston, said in a note to clients Wednesday.
Gas consumption may rise 3.9 percent this year to average 76.34 billion cubic feet a day, driven by power plants and industrial users, the EIA said April 7 in its monthly Short-Term Energy Outlook. Industrial demand may advance 5 percent to 22 billion a day as new plants that manufacture fertilizer and chemicals start up.
Natural gas stockpiles totaled 1.629 trillion cubic feet in the week ended April 17, 5.8 percent below the five-year average, EIA data show.
Government data scheduled for release Thursday may show that gas inventories rose by 86 billion cubic feet last week, compared with the five-year average gain of 55 billion for the period, based on the median of eight analyst estimates compiled by Bloomberg.