Natural gas futures in the United States (US) on 7 October rose to its highest point since June 2015 as investors anticipate a boost in demand for the commodity.
Gas futures for November delivery spiked by 14.4 cents to $3.193 per million British thermal units on the New York Mercantile Exchange. The climb in price of natural gas of 4.7 percent allowed futures to increase for the fifth straight day. As a result, the week of 3 October posted the biggest weekly gain since last August.
Traders were reportedly buoyed on predictions from meteorologists of unseasonably warm weather in the forty-eight contiguous states from 12 October to 21 October, which is expected to increase demand and trim the fat off the supply glut, which stand at 3.68 trillion cubic feet—74 billion cubic feet above that of a year ago.
Hurricane Matthew’s northward journey through the Caribbean caused extensive damage, as well as a death toll in the hundreds. Yet analysts like Phil Flynn of the Price Futures Group do not believe that the storm will significantly hurt natural gas demand due to outages in the southeastern US.
“The latest forecasts seem to suggest the amount of power outages are not as big as feared” from Hurricane Matthew, Flynn said in an interview with Bloomberg.
“The warmer temperatures are adding cooling demand,” he added.
Another possible factor behind the rise in futures might come from the growth of the US natural gas market, which was discussed on OilPrice.com on 7 October. Data from the Energy Information Administration’s 2015 Natural Gas Annual show an increase of natural gas production and consumption, though prices have generally been on a downward slide since 2014.
By Erwin Cifuentes for Oilprice.com
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