U.S. natural gas futures capped the longest monthly winning streak in three years as forecasts showed hot weather making a comeback after cooler conditions next week.
The third straight monthly increase was gas’s best bullish run since the period from October 2013 through January 2014. Temperatures may be above normal in the central and southern U.S. from June 10 through June 14, according to MDA Weather Services.
Gas bulls are betting on hot weather to erode a stockpile surplus that’s the biggest since 2006 for this time of year. Without a scorching summer and a decline in gas production from shale formations, inventories will reach a record before the winter, capping price gains.
“The hot weather has been a bit more intense than advertised,” said John Kilduff, a partner at Again Capital LLC in New York. “It’s stoking some early season cooling demand.”
Natural gas for July delivery rose 11.9 cents, or 5.5 percent, to $2.288 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 29. Gas gained 5.1 percent this month.
Gas demand for power plants has advanced 26 percent from this time last year, data from PointLogic Energy show. U.S. natural gas production slipped 1 percent in March from the previous month to 91.06 billion cubic feet a day, according to the U.S. Energy Information Administration.
“Summer demand sensitivities are starting to give the bulls a little hope,” Drew Wozniak, vice president for market research analysis at ICAP Energy in Louisville, Kentucky, said in a note to clients Tuesday. “If this was ever going to happen, it needed to be now.”