Best U.S. Natural Gas Rally in 5 Months May Soon Lose Its Steam

The longest U.S. natural gas rally in five months may falter as cooler temperatures crimp demand, bolstering stockpile gains. 

Half of the 10 analysts and traders surveyed by Bloomberg expect gas futures to retreat after climbing for the third straight week, the longest string of weekly gains since early January. Another three expect prices to advance and the rest were neutral. 

Gas futures have rallied as unusually hot weather boosted power-plant demand while the formation of Tropical Storm Colin in the southern Gulf of Mexico stoked concern about storms curtailing output later in the Atlantic hurricane season. Stockpile gains were below average in each of the previous five weeks, government data showed Thursday.

But now the heat is easing. Northeast and mid-Atlantic temperatures will be below normal through June 13 with seasonal readings over the following 10 days, said Commodity Weather Group LLC.

“Tropical storm concerns have faded, as has a recent spike in cooling demand,” said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. “Inventories are high and injections are likely to build.”

Natural gas futures for July are up 9.1 percent so far this week to $2.617 per million British thermal units at Thursday’s close on the New York Mercantile Exchange. Futures had earlier risen as high as $2.630, the highest intraday price since September.

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