U.S. gas: Futures settle near one-month high

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Natural-gas futures rose to their highest settlement price in about a month Wednesday, as persistent heat helped futures to rally for a fourth-straight session.

Natural gas for August delivery settled up 7 cents, or 1.6%, at $4.403 a million British thermal units on the New York Mercantile Exchange.

The last time futures settled above $4.40 was June 16, with a settlement price of $4.412/MMbtu. Futures also reached an intraday high of $4.418/MMBTu Wednesday, the highest intraday price since June 30.

High temperatures across the Midwest and eastern half of the U.S. have driven the advance in futures, as traders bet that demand for natural gas will increase.

Use of the power-plant fuel tends to increase in the summer as more of it is needed to generate electricity to power air conditioning.

Above-normal temperatures are expected to linger over the middle third of the country in forecasts for the next six to 15 days, according to Commodity Weather Group.

Despite the heat, it isn't clear if natural-gas futures will continue their rally above $4.40.

"I think we've run straight into resistance here," said Matt Smith, a commodity analyst with Summit Energy in Louisville, Ky.

"Given the supportive outlook on the weather forecast, the fact that we're not able to push on through this level is really a bearish signal," he said.

There is also trepidation for traders ahead of Thursday's weekly inventory report, Smith said, noting that last week's larger-than-expected 95-bcf build drove prices down.

Along with concerns about the storage-injection figure, record production levels and "sputtering" economic signals have made it difficult for the market to hold gains above $4.50, said Gene McGillian, an analyst with Tradition Energy.

"If we get a number, say 70 [bcf] and below, it's pretty clear the market could push through $4.50 and push to $4.75," McGillian said.

Injections that are below predictions often lift prices, while those that exceed expectations typically push prices lower.

In a Dow Jones Newswires survey, analysts and traders said they expect the Energy Information Administration to report that 76 billion cubic feet of gas was added to storage during the week ended July 8. That result would be below last year's 78-bcf storage build as well as the five-year average injection of 88 bcf.

The EIA's natural-gas inventory report is scheduled to be released Thursday at 10:30 a.m. EDT.



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