Natural Gas Gains as Late Summer Warm Spell Persists

Natural gas futures gained Tuesday as warmer weather forecast in the Midwest and East may spur demand from power plants.

Temperatures from New Mexico to Maine may be higher than normal from Sept. 7 through Sept. 11, according to MDA Weather Services. Washington D.C. may reach 91 degrees Fahrenheit (33 degrees Celsius) on Sept. 7, 8 above normal, according to AccuWeather Inc.

“We still have a couple weeks of summer left in front of us,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re continuing to see strong power sector demand.”

Natural gas for October delivery rose 1.3 cents, or 0.5 percent, to $2.702 per million British thermal units on the New York Mercantile Exchange.

Demand for gas from power plants climbed 4.4 percent through Monday compared with August 24, according to LCI Energy Insight in El Paso, Texas. Power plants account for about 33 percent of gas demand.

Gains could be short-lived because the hotter weather is coinciding with above-average gas storage levels, McGillian said.

Stockpiles may increase by 89 billion cubic feet in a government report scheduled for release Thursday, according to the median of five analyst estimates compiled by Bloomberg.

Storage totaled 3.099 trillion cubic feet as of Aug. 21, 2.9 percent above the five-year average and 18 percent higher than the same time last year, according to the Energy Information Administration. By the end of the injection season on Oct. 31, inventories may reach 3.867 trillion cubic feet, 1.8 percent above the five-year norm, EIA data show.

There may also be cooler air flowing into the Northern Plains and Midwest from Sept. 11 through Sept. 15, according to MDA. The high in Minneapolis for Sept. 13 may be 66 degrees Fahrenheit (19 Celsius), 6 lower than usual, according to AccuWeather Inc.

“The market would be weaker if not for this last blast of cooling season,” McGillian said. “Once we get beyond that it gets tough to find immediate factors pushing to rising prices.”

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