U.S. Natural Gas Extends Gain on Higher Cooling Demand Outlookby
U.S. natural gas futures climbed for a second day on speculation that hotter weather will boost demand for the power-plant fuel amid a supply slowdown.
Temperatures may be warmer than normal on the U.S. East Coast from May 9 to May 13 after a cold spell this week, according to Commodity Weather Group LLC. Gas output from the lower 48 states dropped for four straight weeks to April 7, the longest losing streak since 2013, data from PointLogic Energy show.
After sliding to a 17-year low in March, gas is rallying as bullish traders look for signs that the flood of production from shale formations is beginning to subside. Without a hot summer and a decline in supply, stockpiles are on course to reach a record before the winter.
“Once it starts to get a little warmer, that will be supportive for prices,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “The rig count is so low that we’re at the point where production should be starting to fall.”
Natural gas for June delivery rose 5.5 cents, or 2.6 percent, to settle at $2.141 per million British thermal units on the New York Mercantile Exchange. Prices are down 8.4 percent this year.
Gas stockpiles probably climbed by 67 billion cubic feet last week, surpassing the five-year average gain of 64 billion for the period, based on the median of 18 analyst estimates compiled by Bloomberg. Inventories were 48.2 percent above the five-year average as of April 22.