Natural gas prices forecast september 3-7, 2012 ; Natural gas futures rose for the third consecutive day on Friday, hitting a one-week high as updated weather forecasts showing warmer-than-normal temperatures in key parts of the U.S. in the coming days boosted near-term demand expectations for the fuel.
On the New York Mercantile Exchange,
natural gas futures for delivery in October settled at USD2.803 per million British thermal units by close of trade on Friday.
Earlier Friday, prices hit a session high of USD2.808 per million British thermal units, which was the strongest level since August 24.
On the week, natural gas prices rose 3.75%, the first weekly gain in six weeks. On the month, however, prices were 13% lower, the worst monthly result since March.
Updated weather forecasts Friday predicted some late-summer heat returning to key parts of the U.S., raising the prospect of increased gas demand over the Labor Day weekend.
Industry weather group MDA EarthSat said temperatures in the Midwest and across the East Coast were expected to be well above normal over the next five days.
Above-average summer temperatures increase the need for gas-fired electricity to cool homes, boosting demand for natural gas.
Natural gas futures also drew support from weekly production data from industry research group Baker Hughes, which showed the number of active rigs drilling for natural gas in the U.S. fell by 13 to 473 last week, the lowest since 1999.
However, ongoing concerns over bloated U.S. inventory levels were likely to cap any significant gains in prices.
The U.S. Energy Information Administration said in its weekly supply report published Thursday that natural gas storage in the U.S. rose by 66 billion cubic feet last week, just above market expectations for an increase of 63 billion cubic feet.
Last year, stocks rose by 60 billion cubic feet, while the average rise in the week over the previous five years was 62 billion cubic feet.
Total U.S. gas supplies stood at 3.374 trillion cubic feet, 14.6% above last year’s level and 12% above the five-year average level for the week.
Inventory didn't top the 3.3-trillion cubic feet level in 2011 until the end of September, with stocks peaking at a record 3.852 trillion cubic feet in November of last year.
Market analysts have warned that without strong demand through the rest of the summer cooling season, gas inventories will reach the limits of available capacity later this year.
The storage surplus to last year will have to be cut by at least another 150 billion cubic feet in the 13 weeks left before winter withdrawals begin to avoid breaching the government's 4.1 trillion cubic feet estimate of total capacity.
Early injection estimates for this week’s storage data range from 21 billion cubic feet to 57 billion cubic feet, compared to last year's build of 62 billion cubic feet. The five-year average change for the week is an increase of 60 billion cubic feet.
A bout of extreme heat across much of the U.S. over the past two months helped boost natural gas prices above the key USD3.00-level in recent weeks. Prices rallied to a 2012 high of USD3.275 per million British thermal units on July 31.
But futures have come under heavy selling pressure since the start of August, losing almost 17% after extended weather forecasts pointed to milder weather across most parts of the U.S.
Elsewhere in the energy complex, light sweet crude oil futures for October delivery traded at USD96.44 a barrel by close of trade on Friday, adding 0.35% on the week.
Heating oil for October delivery rose 2.05% over the week to settle at USD3.183 per gallon by close of trade Friday.
NYMEX floor trading in New York will be closed for the U.S. Labor Day holiday on September 3.
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