U.S. gas: Heat pushes futures higher

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Hot weather continued to push natural-gas futures higher Wednesday as traders bet more of the power-plant fuel will be needed to meet air-conditioning demand.

Natural gas for August delivery recently traded up 6.4 cents, or 1.5%, to $4.397 per million British thermal units on the New York Mercantile Exchange.

Futures rose for a fourth-straight session and reached an intraday high of $4.412/MMBtu in early trading, the highest intraday price since June 30.

High temperatures and humidity over the eastern half of the country have led to some heat-related deaths. The National Weather Service warned Wednesday morning that conditions will remain "dangerously hot" through at least Friday in the Southern Plains to the East Coast.

Demand for natural gas is expected to rise as more of the fuel will be needed to generate electricity to power air conditioners.

Heat is expected to stay over the middle third of the country, according to Commodity Weather Group.

"Next week it looks pretty steady," said Jason Setree, a meteorologist with the private forecaster.

There aren't too many chances for a break in the heat in the Midwest, Setree said, and places like St. Louis down to Texas are expected to see hot weather in not only the next two weeks, but through the end of July.

Futures could test the $4.45 level in the next several days if prices hold their strength, said analysts with Canaccord Genuity in a note.

With the heat holding steady, some traders aren't as concerned with the rising natural-gas production expected this year.

Production levels are estimated to increase in 2011 to 65.4 Bcf/d, the Energy Information Administration said in its Short Term Energy Outlook released Tuesday.

Traders are also looking ahead to the EIA's weekly storage report due Thursday. A bigger-than-expected build in weekly U.S. inventories reported last week caused prices to plunge.

Meanwhile, natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.43/MMBtu, according to IntercontinentalExchange, up 5.5 cents from Tuesday's average. Natural gas for Thursday delivery at Transcontinental Zone 6 in New York traded at $4.72/MMBtu, down 27.7 cents from Tuesday.



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