Natural gas futures traded near a three-week high in New York as meteorologists predicted an August heat wave that would spur demand for electricity generation after a mild June and July.
Temperatures may be above normal across most of the lower 48 states from Aug. 17 through Aug. 21 after cool weather in the East this week, according to MDA Weather Services in Gaithersburg, Maryland. Gas (NYMEX:CLQ14) reached $4.02 in earlier electronic trading, the highest since July 17.
“We haven’t had a sustained heat wave for some time,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We’re flirting with $4, and that’s also bringing some buyers to the market.”
Natural gas for September delivery rose 0.5 cent to $3.97 per million British thermal units at 9:24 a.m. on the New York Mercantile Exchange. Volume for all futures traded was 48% above the 100-day average. Prices are up 20% from a year ago.
The high in Washington on Aug. 21 may be 96 degrees Fahrenheit (36 Celsius), 10 above normal, according to AccuWeather Inc. in State College, Pennsylvania. St. Louis’s temperature may reach 98 degrees, also 10 more than usual, AccuWeather data show.
Power plants account for 31% of gas demand, data from the U.S. Energy Information Administration show. The agency is the Energy Department’s statistical arm.
Gas deliveries to electricity generators have jumped 23% since June 21 to 28.5 billion cubic feet yesterday, according to LCI Energy Insight in El Paso, Texas. Gas inventories were 20% below the five-year average as of Aug. 1, the biggest deficit for the time of year since at least 2005.
AGL Resources Inc. and three partners plan to build a $1 billion pipeline to deliver natural gas from Pennsylvania’s Marcellus Shale to New Jersey.
The PennEast Pipeline project involves a 100-mile (161 kilometer) line from Luzerne County in northeastern Pennsylvania to an interconnection in New Jersey, the companies said in a statement today. The pipeline will have a capacity of 1 billion cubic feet a day, enough to service 4.7 million homes.
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