U.S. natural gas pops 8.5% with hotter than normal temps ahead
U.S. natural gas futures jumped to a three-week high on Wednesday on a drop in daily gas output over the past few days and forecasts for hotter weather during the next two weeks.
The heat already has raised power demand to record levels in Texas and other parts of the U.S. as homes and businesses crank up their air conditioners.
For the second time this week, Texas power grid operator ERCOT asked homes and businesses to conserve electricity.
Front-month Nymex natural gas (NG1:COM) for August delivery settled +8.5% to $6.689/MMVtu, the highest close since June 22.
ETFs: (NYSEARCA:UNG), (UGAZF), (DGAZ), (BOIL), (FCG), (KOLD), (UNL)
Gas-focused equities trade broadly higher, including (NYSE:AR) +8%, (EQT) +6.9%, (CHK) +5.4%, (CRK) +4.7%, (RRC) +2.8%, (SWN) +1.5%.
Traders noted prices were up despite the ongoing outage at Freeport LNG’s liquefied natural gas export plant in Texas, which has left more gas for utilities to refill low stockpiles for the winter.
Gas was trading at ~$54/MMBtu in Europe, a four-month high, as Russian gas exports on the three main lines into Germany, including Nord Stream 1, fell to 1.3B cf/day due to the shutdown of Nord Stream for maintenance on July 11.
This week’s European gas level compares with 3.7B cf/day over the past month, 6.5B cf/day in early June and an average of 9.4B cf/day in July 2021.