U.S. natural gas futures rose for a third straight session and hit their highest in more than two weeks on Tuesday, continuing to build on expectations of a dip in production going forward.
Front-month gas futures for June delivery on the New York Mercantile Exchange were 6.9 cents higher, or 2.9%, at $2.44 per million British thermal units (mmBtu) at 09:35 a.m. EDT. The contract hit its highest since April 28.
“A combination of the reduction of production in Canada and the substantial drop in (US) rig counts seem to signal that we may have turned the bottom,” Phil Flynn, senior analyst at Price Futures Group in Chicago.
A number of oil and gas companies in Canada’s main crude-producing province Alberta restarted production after wildfires forced them to temporarily curtail output.
Energy services firm Baker Hughes Co on Friday said the gas rig count, an early indicator of future output, fell by 16 to 141 in the week to May 12, the lowest since April 2022.
But looking ahead, “the perception of oversupply continuing into the summer is going to weigh a little bit.”
Data provider Refinitiv said average gas output in the U.S. Lower 48 states was 101.5 billion cubic feet per day (bcfd).
Meanwhile, in Europe gas fell to a fresh near 2-year low amid tepid demand and strong supply, but lower wind speeds supported day-ahead prices.
Meteorologists projected the weather in the U.S. Lower 48 states would switch from warmer-than-normal levels from May 12-17 to near-normal from May 18-27.
Refinitiv forecasts that U.S. gas demand, including exports, would fall from 92.0 billion cubic feet per day (bcfd) this week to 89.0 bcfd next week.
(Reporting by Rahul Paswan in Bengaluru; Editing by Nick Zieminski)