U.S. Gas Futures Head for Second Weekly Drop as Stockpiles Mountby
U.S. natural gas futures headed for a second straight weekly loss on speculation that July heat won’t prevent stockpiles from reaching a record before the winter.
Temperatures may be warmer than previously expected in the central U.S. July 20 to July 24, and sweltering conditions are also forecast for the West from July 25 to July 29, according to MDA Weather Services. Still, inventories of the heating and power-plant fuel are 22 percent above the five-year average for the time of year.
Time may be running out for hot weather to eliminate the gas supply glut and send prices to $3 per million British thermal units for the first time in over a year. While futures surged to a 13-month high in early July as above-normal temperatures boosted gas demand for electricity generation, bullish traders need a sustained heat wave to prolong the rally.
“The markets have been having trouble moving higher and we haven’t really had a new catalyst,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Looking forward, it’s really going to be weather that’s going to be that driving factor.”
Futures for August delivery fell 3.6 cents to $2.691 at 11:34 a.m. on the New York Mercantile Exchange. Prices have fallen 3.6 percent this week and are down 10 percent since reaching a 13-month high on July 1.