Natural gas prices in the U.S. continue to rally Wednesday, with futures soaring past $8 for gains of over 5% this morning, as inventory concerns mount ahead of a summer that promises high demand.
In the U.S., natural gas prices hit $3.347, for a 5.29% rally as of 9:36 a.m. EST.
In the previous session, U.S. natural gas hit a 14-year high, jumping more than 9%, before pulling back to close at just under $8.
On Tuesday, the American Petroleum Institute (API) reported a draw in gasoline inventories of 4.50 million barrels for the week ending April 29-after the previous week's 3.91-million-barrel draw.
This decline in stockpiles comes as weather forecasts show unusually high temperatures in some parts of the country for early May, which will mean an early start to the American air-conditioning season, signaling increasing demand for natural gas.
Natural Gas Intelligence cited Bespoke Weather Services as saying that current inventory and production levels would not be sufficient to meet this demand, which could lead to a situation in which natural gas prices top $10 in the coming weeks.
U.S. gas inventories are now an estimated 17% below normal for this time of year as exports hit new records and producers hold back from new production.
Record volumes of fuel are being exported from the Gulf Coast, draining domestic supplies of both gasoline and diesel. According to Vortexa tracking data cited by Bloomberg, In April, U.S. companies were exporting up to 2.09 million bpd of gasoline, diesel, and jet fuel from the Gulf Coast.
By Charles Kennedy for Oilprice.com
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