Natural gas futures climbed from a one-month low as meteorologists predicted hot weather that would stoke demand from power plants.
The weather may be warmer than normal in parts of the Midwest and South from July 13 through July 22, MDA Weather Services said. The high in Atlanta on July 18 may be 93 degrees Fahrenheit (34 Celsius), 5 more than average, according to AccuWeather Inc.
“It’s getting a little hotter, and there’s a reluctance to drive prices much lower,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “The bears have been disappointed by the market’s stability.”
Natural gas for August delivery rose 0.9 cent to $2.725 per million British thermal units at 10:01 a.m. on the New York Mercantile Exchange. Volume for all futures traded was 11 percent below the 100-day average. Gas closed at $2.716 on Tuesday, the lowest settlement since June 8.
Goldman Sachs Group Inc. is maintaining its estimate of $3.25 per million Btu for average gas prices in the second half of 2015, analysts including Jeffrey Currie in New York said in a note to clients Wednesday.
“Normalizing summer demand should help rein in current oversupply,” Currie said.
Gas deliveries to electricity generators were up 6.1 percent from a year ago through Tuesday, according to LCI Energy Insight in El Paso, Texas. Power plants account for 33 percent of gas demand in the U.S.
Detroit’s temperatures may reach 85 degrees on July 18, 3 above normal, AccuWeather said on its website.
Power-plant demand for gas may jump 13 percent this year to 25.22 billion cubic feet a day in response to low prices, according to the EIA’s monthly Short-Term Energy Outlook on July 7. Industrial use is forecast to rise 3.3 percent to 21.67 billion as new fertilizer and chemical plants are completed.
Natural gas production from Pennsylvania, which includes the Marcellus shale reservoir, slipped 2 percent in April to 13.13 billion cubic feet a day from March, the EIA said June 30 in its monthly EIA-914 report.