Source: agencies
US natural gas futures jumped nearly 10% on Wednesday to a five-week high on expectations of sweltering weather over the next two weeks that will increase the use of air-coolers and demand for electricity from gas-fired plants, following a drop in electricity demand. Record levels in a few regions of the United States, including Texas.
“Demand for electricity is at an all-time high,” analysts at Gilber & Associates said in a report, adding that “next week is expected to be the hottest of the season.”
The price increase came despite a drop in gas feedstock to LNG export plants in Louisiana and the continued shutdown of the Freeport plant in Texas, leaving more fuel in the US.
Freeport is the second largest liquefied natural gas export plant in the United States, and was consuming about two billion cubic feet per day of gas before it closed on June 8.
Gas prices for August delivery on the NYMEX rose 74.3 cents, or 10.2%, to settle at $8.007 per million British thermal units, the highest closing level since June 13.
In a year of already volatile trading, today’s price gains are just the biggest one-day percentage increase since early July.
So far this year, US gas contracts to the nearest maturity are up about 115 percent because much higher prices in Europe and Asia keep demand for US LNG exports strong, especially since the Russian invasion of Ukraine is fueling fears that Moscow may cut off gas supplies to Europe. .
Gas is traded around $48 per million thermal units in Europe and $38 in Asia.