Coal News We love to talk!

JUL 09 2012

US natural gas prices rise to six-month high

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 09th JUL 2012

US natural gas prices hit a six-month high, boosted by demand from the heatwave that has hit North America.

The unusually hot summer weather has lifted the natural gas market, which had been depressed for most of the year due to a rise in shale gas supplies.

More

Air conditioning demand has surged over the past few weeks as large parts of the US faced temperatures of more than 38C (100F). The Nymex April natural gas benchmark rose above the key level of $3 per million British thermal units for the first time since January.

The hot weather was a boon for the natural gas industry, which suffered from high supplies and low demand last winter due to the mild temperatures. Without the significant air-conditioning demand this summer, the rise in inventories "would have resulted in the much discussed end-of-season collapse in prices, said Teri Viswanath, analyst at BNP Paribas in New York.

Meteorologists said that this years summer heat had come a week earlier than in 2011, when high temperatures intensified at the end of July and continued into August.

This past week was particularly hot, with average national temperatures 2 per cent higher than any week in 2011, according to Matt Rogers at weather consultants Commodity Weather Group in Maryland.

He said that the atmosphere had been affected by the residual effects of the La Nia weather phenomenon, which had brought hot and dry weather in wide parts of the US last year.

US government inventory data released on Friday reflected the strong demand.

Domestic gas stocks last week rose by a less than expected 39bn cubic feet, compared with forecasts of about 43 bcf. Gas in underground storage totalled 3,102 bcf at the end of June, 24 per cent higher than a year ago. Nymex August natural gas was trading at $2.835 mBtu.

Traders are now focused on the development of El Nio conditions, which are expected to strengthen and bring cooler weather, affecting electricity demand. The weather patterns were expected to change next week, said Mr Rogers.

Elsewhere in the energy market, Brent crude, which this week hit a month-high, rallying above $100, eased back. Oil prices rallied earlier in the week as the EUs Iranian sanctions kicked in and Norwegian oil producers prepared for an output stoppage after labour negotiations broke down.

Weaker than expected US jobs data and news that the Norwegian government had stepped into intervene in the talks between the unions and the oil industry association prompted profit-taking yesterday. ICE August Brent on Friday traded at $98.19 a barrel.

Tags

Gas Oil United States Iran

Related News

  • Oil companies to lose less in June from selling diesel  Read more
  • Government denies NTPC chairman Arup Roy Choudhury extension  Read more
  • Green Bench halts CBM work by ONGC, GAIL in Cauvery delta  Read more
  • Coal, gas and misaligned priorities  Read more
  • Narendra Modi govts target of 20% gas energy mix by 2025 set to hit high-cost hurdle  Read more
  • High Commissioner's address at the inauguration of the 4th Asia Energy Security  Read more
  • Excise duty on petrol, diesel raised; to have no impact on retail prices  Read more
  • Petrol prices cut again; OMCs silent on diesel  Read more
  • Weights & measures department had alerted oil companies 2 years ago  Read more
  • Govt refuses sovereign guarantee for crude oil imports from Iran  Read more