U.S. natural gas futures rose more than 2% on Monday driven by higher demand for cooling due to an ongoing heat wave in the United States.
Front-month gas futures on the New York Mercantile Exchange (NYMEX) were up 12.5 cents, or 1.5%, to $8.424 per million British thermal units (mmBtu) at 9:44 a.m. EDT (1344 GMT), the contract hits its highest in over a month earlier in the session.
“It is looking much warmer than normal, which is driving demand,” Robert DiDona of Energy Ventures Analysis said.
Virtually all of the contiguous United States experienced above-normal temperatures in the past week, with the further dangerously hot weather forecast. The U.S. heat wave followed record heat that killed hundreds if not thousands of people and sparked wildfires in Europe.
“Bullish stance still advised in a market that should be approached strictly from the long side with upside now existing to the $9.00 area,” Ritterbusch and Associates wrote in a note.
Data provider Refinitiv said average gas output in the U.S. Lower 48 states has risen to 96.1 bcfd so far in July from 95.3 bcfd in June.
“Once the short-term heat wave is over, traders will be focused on weather end of summer injection season levels are relative to the five-year norm, which we’re forecasting to be behind the five year average causing some fundamental tightness heading into the winter,” DiDona added.
The U.S. oil and natural gas rig count last week rose for a third week as high prices encouraged spending at the wellpad, boosting demand for some oilfield services companies.
A repaired gas turbine will be installed in the Nord Stream 1 pipeline from Russia to Germany once it is returned after maintenance, and natural gas will then be supplied in “corresponding volumes,” a Kremlin spokesman said.