U.S. Natural Gas Futures Rise to $3 for First Time in 16 Months

U.S. natural gas futures rose to $3 per million British thermal units for the first time since May 2015 as late summer heat and production curtailments burned through a glut of shale supplies.Scorching weather has boosted air-conditioner use, sending gas demand from power plants to a record and eroding stockpiles. Gas inventories were 9.3 percent above the five-year average as of Sept. 9, compared with 54 percent in April.The gas market is staging a dramatic comeback from March, when prices hit a 17-year low after a mild winter failed to stoke strong heating demand. America’s shale gas producers have since scaled back drilling, while explorers evacuated rigs in the Gulf of Mexico last month as Tropical Storm Hermine approached, forcing supplies offline.“We’ve seen a considerable shrinkage of the surplus” to the historical average, said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. “We have a fundamentally stronger demand picture.”Natural gas for October delivery surged 7.8 cents, or 2.7 percent, to $3.012 per million British thermal units at 9:29 a.m. on the New York Mercantile Exchange. Futures earlier rose to $3.014, the highest since May 2015. They are up 29 percent so far this year.Temperatures may be mostly above average in much of the eastern U.S. from Sept. 30 through Oct. 4, according to MDA Weather Services. The high in Washington may be 81 degrees Fahrenheit (27 Celsius) on Oct. 4, 9 more than average, according to AccuWeather Inc. forecasts.
Source: Bloomberg

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