U.S. natural gas futures jumped to a nine-month high after government data showed a supply gain that fell short of analysts’ estimates, signaling production declines.
Gas stockpiles climbed by 65 billion cubic feet last week, compared with a median forecast of 76 billion in data compiled by Bloomberg. The inventory surplus to the five-year average contracted for a ninth straight week.
Natural gas has surged from a 17-year low in March on speculation that a sweltering summer will boost demand for the fuel from power plants as explorers in shale reservoirs curtail production. The energy rout has pushed the number of rigs drilling for gas in the U.S. to the lowest since at least 1987.
Last week’s storage gain “is a very low number, especially considering the fact that demand is usually lower during Memorial Day weekend,” Kyle Cooper, director of research at IAF Advisors and Ion Energy in Houston, said by phone Thursday. “We’re certainly seeing increased power demand, and supply looks like it’s trending downward.”
Natural gas for July delivery rose 14.9 cents, or 6 percent, to $2.617 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Sept. 17. Prices are up 12 percent this year.
Gas production in the lower 48 states is down 1.5 percent from a record 82.81 billion cubic feet a day in February, data from PointLogic Energy show. Temperatures may be above normal in parts of the central U.S. through June 23, according to Commodity Weather Group LLC.
“The U.S. gas market keeps tightening with supply now in visible decline,” Jonathan Wolff, an equity analyst at Jefferies Group LLC in New York, said in a note to clients Thursday.