U.S. natural gas futures slid from a 10-month high on speculation that production will rebound amid higher prices.
Gas production is estimated to have increased 1.8 percent in the contiguous U.S. this year and has climbed over the past two weeks, according to PointLogic Energy data. Natural gas rigs climbed by four to 90 last week, the most since March, Baker Hughes Inc. data show.
“Some of the drillers who have been off on the sideline might start coming back and start ratcheting up output to try to take advantage of the increase in price," said Gene McGillian, senior analyst and broker at Tradition Energy in Stamford, Conn. “I think it’s a little premature to say whether or not the market has topped out, however.”
Gas has gained about 80 percent after reaching a 17-year low in March as summer heat boosted demand for the power plant-fuel, eroding a stockpile glut. An explosion at a gas plant in southern Mississippi that closed two offshore platforms, combined with recent flooding in West Virginia, may have also helped narrow the surplus.
Natural gas for August delivery fell 2.7 cents, or 0.9 percent, to settle at $2.863 per million British thermal units on the New York Mercantile Exchange. Prices closed Tuesday at $2.917 Tuesday and on Wednesday touched $2.974, the highest intraday level since May 21, 2015, after forecasts showed temperatures well above normal from July 9 through July 13 across most of the contiguous U.S.