Gas futures jumped 4.2 percent Thursday, the steepest one-day gain in 10 weeks, after a government report showed stockpiles grew less than expected. Prices could extend gains given forecasts for unusually warm weather that’s set to sweep across most of the lower- 48 states in the next two weeks.
“Our gut feeling is that the cold is done and we are going to see hotter weather, and that’s going to drive prices up,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Money managers, who are holding the most bullish bets on the power-plant fuel going into summer since 2014, are relying on cooling demand to help wipe out a persistent supply glut. Five of 10 traders and analysts surveyed by Bloomberg News see further price gains. Three were bearish and the rest expect prices to hold steady.
Gas futures are poised for their second straight week of gains, the first time this has happened since March.
The market is finding support “on the idea that we have two full months minimum of possible hot weather,” said Gene McGillian, manager for market research at Tradition Energy in Stamford, Connecticut.
The U.S. West may see record heat next week, with more seasonal readings seen in the East following unusually high temperatures the past few days, according to MDA Weather Services. Most of the lower 48 states will experience above normal temperatures in the last week of June.
The U.S. Northeast, including New York, the Southwest and the Gulf of Mexico coastline including all of Florida, have the greatest chance of above-normal temperatures from July to September, according to the U.S. Climate Prediction Center.
Stockpiles rose by 78 billion cubic feet last week to 2.709 trillion on June 9, U.S. Energy Information Administration data showed. The five-year average gain for the period was 87 billion and analysts were expecting an increase of 88 billion.