U.S. gas: Futures recover slightly from storage report

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Natural-gas futures rose Friday as forecasts for hotter weather in the Midwest rolled in.

Natural gas for August delivery recently traded up 3.6 cents, or 0.9%, at $4.169 a million British thermal units on the New York Mercantile Exchange.

The contract received a boost from expectations of greater demand from the power-generation sector, as higher temperatures would increase the use of electricity to run air conditioners.

There is potential for extreme heat in parts of the Plains and Western Midwest toward the end of next week, MDA EarthSat Weather reported.

The West and parts of the Northeast have a chance for below-normal temperatures early in the six- to 10-day forecast, but above-normal temperatures are expected to remain for the country's mid-section in the 11- to 15-day forecast.

Gas futures regained some ground after Thursday's losses, triggered by the U.S. Energy Department's release of data showing a larger-than-expected weekly storage injection.

Production of the fuel remains high, though the number of rigs drilling for natural gas has fallen from last August's peak of 992 rigs to 874 rigs. The most recent count is set to be released by Baker Hughes Inc. (BHI) at 1 p.m. EDT.

Drilling-rig counts aren't expected to significantly change the "bearish perception" of the production factor, said Ritterbusch & Associates in a note.

Weak economic data released Friday showed the U.S. unemployment rate rose to 9.2% and the number of jobs added last month was well below expectations.

Futures fell only about 1 cent after the data release, but it was a sign that the economy wasn't regaining strength as some thought.

A stronger economy and manufacturing component could support natural gas, said Rich Ilczyszyn, senior market strategist with Lind-Waldock.

"Unfortunately [because of the employment numbers], I doubt we're going to get that shot in the arm," he said.

The market has a value area that traders are buying against at $4, Ilczyszyn said, and he expected the market to "waffle around" but ultimately stay in a range of $4 to $5.

Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.2000/MMBtu, according to IntercontinentalExchange, up 1 cent from Thursday's average. Natural gas for delivery through Monday at Transcontinental Zone 6 in New York traded at $4.4400/MMBtu, down 12.5 cents from Thursday's average.



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