U.S. gas: Warmer forecasts lift futures

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Natural gas futures rose on calls for temperatures to rise throughout much of the country.

Natural gas for July delivery recently traded 4.1 cents, or 0.95% higher, at $4.358 a million British thermal units on the New York Mercantile Exchange.

The benchmark contract has settled lower the last six sessions, falling Monday to its lowest closing price since May 20 as futures spiraled from an 11-month intraday high on cooler weather that curbed demand for natural gas to fuel air conditioners.

Forecasts Tuesday--the official start of summer--called for a new wave of above-normal temperatures, however, lifting prospects for renewed demand among power producers.

"The forecast has finally taken a step in the warmer direction today after largely trending cooler during the past week," MDA EarthSat said.

The private forecaster predicts the ridge of hot air currently over the Southwest pushing into the Great Plains and Texas next week, eventually bringing hotter-than-normal temperatures to a swath stretching from New Mexico to Maine through the July 4 weekend.

The ongoing heat should boost cooling demand in the Northeast, Southeast and South-Central regions about 20% above seasonal norms, analysts with Canaccord Genuity said.

"Combined, these regions constitute nearly 60% of the country's gas-fired generation, thus keeping a bid underneath gas power demand over the next couple days," the analysts wrote in a client note.

So far this spring unusually balmy weather and outages at nuclear power facilities have preserved deficits between current U.S. natural gas stockpiles and both year-ago and five-year-average storage levels.

Many analysts and the Energy Information Administration expect those gaps to close by fall as brisk onshore production from the country's prolific unconventional reservoirs bloats storage levels to near-record levels.

Meanwhile, natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.38/MMBtu, according to IntercontinentalExchange, up 5 cents from Monday's average. Natural gas for Wednesday delivery at Transcontinental Zone 6 in New York traded at $4.78/MMBtu, up 5 cents from Monday's average.



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Henri DeToi    
Canisto, Maine  |  June, 21, 2011 at 02:11 PM

I can't believe there are idiots betting on the weather forecast.


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