U.S. natural gas prices rallied sharply for the second consecutive session on Tuesday, as forecasts for late this week and early next week turned warmer, boosting near-term demand expectations for the heating fuel.
On the New York Mercantile Exchange, natural gas for delivery in July hit an intraday peak of $2.767 per million British thermal units, the most since May 28, before trading at $2.752 during U.S. morning hours, up 4.7 cents, or 1.74%.
A day earlier, natural gas prices soared 11.5 cents, or 4.44%, to end at $2.705. Futures were likely to find support at $2.581 per million British thermal units, the low from June 5, and resistance at $2.845, the high from May 28.
Updated weather forecasting models pointed to warmer-than-normal temperatures across many regions through June 18, boosting early summer cooling demand for the fuel. Forecasts originally called for mild summer weather during the period.
Demand for natural gas tends to fluctuate in the summer based on hot weather and air conditioning use.
Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.
Meanwhile, the U.S. Energy Information Administration’s next storage report slated for release on Thursday, June 4 is expected to show a build of approximately 110 billion cubic feet for the week ending June 5.
Supplies rose by 109 billion cubic feet in the same week last year, while the five-year average change is an increase of 89 billion cubic feet.
The EIA said last week that natural gas storage in the U.S. rose by 132 billion cubic feet, above expectations for an increase of 121 billion and following a build of 112 billion cubic feet in the preceding week.
The five-year average change is an increase of 92 billion cubic feet, while supplies rose by 118 billion cubic feet in the same week last year.
Total U.S. natural gas storage stood at 2.233 trillion cubic feet as of last week, 50.7% higher than during the same week a year earlier and 1.0% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have made up for all of last winter’s unusually strong demand.
Elsewhere on the Nymex, crude oil for delivery in July shed 48 cents, or 0.8%, to trade at $58.63 a barrel, while heating oil for July delivery dipped 0.53% to trade at $1.859 per gallon.