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The U.S. benchmark natural gas price jumped more than 5% on Monday as power generators are expected to burn more gas to keep air conditioners going that are just now starting to come online in the lower half of the Eastern United States.
As of 3:34 p.m. ET on Monday, the price of natural gas at Henry Hub was up by 4.96 percent at $3.108/ MMBtu. At the start of trading, the price was at $2.961/ MMBtu.
The June Nymex contract was up $.154 from the prior settlement at $3.115/ MMBtu.
Natural gas prices saw their biggest daily percentage gain since the Texas Freeze earlier in the day when prices rose more than 5%.
The price hike is largely attributed to the beginnings of summer cooling demand season in the lower half of the United States, with warmer weather expected to arrive later this week and into next week.
According to Bespoke Weather Services, there was enough heat to add 7 gas-weighted degree days to its 15-day forecast, with “several days of hotter-than-normal mid-May weather.”
But those warmer temps are only expected to last a couple of days—this could mean the current price rises are a bit exaggerated.
The EIA’s weekly natural gas storage report showed last week that working gas in storage was 2,029 billion cubic feet (Bcf) at the end of the week to May 7. This represents a net increase of 71 Bcf from the previous week.
That’s below the five-year (2016-2020) average of 2,101 Bcf.
As per the EIA data, natural gas stocks in the United States at the end of the week to May 7 were 378 Bcf less than last year at this time and 12 Bcf.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.