A forecast for cooler temperatures in the eastern region of the U.S. boosted natural gas futures Monday after prices had declined sharply to 11-month lows.
Natural gas for November delivery settled 6 cents, or 1.7%, higher at $3.541 a million British thermal units on the New York Mercantile Exchange. The benchmark contract had fallen as low as $3.486 in earlier trading.
According to the Dow Jones Newswires, futures rebounded from fresh lows as weather forecasters are expecting a drop in temperatures across much of the U.S. over the next two weeks. MDA Earthstat said Monday its 11-15 day forecast showed cooler temperatures ahead for the eastern third of the U.S.
Cool weather would likely bring about an increase in gas-fired electricity demand, as households and businesses begin turning on heating.
But in recent weeks, mild temperatures have delayed the start of heating season, exacerbating already high supplies and pushing prices to the lowest level since last October. Last week, futures declined by more than 5 percent.
Natural gas prices came under additional pressure after industry research group Baker Hughes said Friday that the number of active rigs drilling for natural gas in the U.S. last week climbed by 12 to 935, the highest since the week ended December 22, 2010.
The EIA’s report also showed that gas storage rose by 97 billion cubic feet in the week, putting inventories at 28 bcf above the five-year average at 3.409 trillion cubic feet.
With supply levels nearing the record levels set last year, analysts are cautious about any major rebound in prices. Many feel the underlying supply/demand balance in the gas market has been largely unchanged for months.
At Live Energy, we keep our finger on the market’s pulse—so when the market dips, we can help you lock into a low electricity rate at just the right time. For more information on how we can help you find the right electricity plan for your business, contact one of our certified energy advisors at (877) 810-7770 today.
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