The NYMEX July natural gas futures contract climbed 12.4 cents Monday to settle at $2.747/MMBtu, the highest price since it settled at $2.758/MMBtu on September 14, 2015.
The July gas futures contract has rallied over the past several weeks, climbing about 36 cents since June 1.
"Bullish weather is pushing demand higher and supporting the contract's upward momentum, which is likely to continue on short covering and strong fundamentals," said Kyle Cooper, principal analyst at IAF Advisors.
The US National Weather Service's eight- to 14-day forecast called for a high probability of above-normal temperatures across most of the country. The Southwest and Pacific Northwest are forecast to be very hot, more than 15 degrees Fahrenheit above normal, while the Northeast and Appalachia are expected to be around seasonal norms. The middle portion of the country is also forecast to be hotter than usual.
Total demand is expected to increase throughout the week as warmer than normal temperatures blanket most of the country. Demand picked up for Monday's evening cycle estimates to nearly 70 Bcf/d, driven by higher power burn levels, according to S&P Global Platts unit Bentek Energy.
Power burn could hit above 35.0 Bcf/d over the next few days if current weather forecasts hold. Southwest power burn could be especially strong and rise close to 5.5 Bcf/d this week, which is 2.2 Bcf/d above the 30-day average for the region, as a strong heat wave settles in.
US natural gas in storage increased by 69 Bcf to 3.041 Tcf in the week ended June 10, according to the Energy Information Administration's storage report released last Thursday. The net injection was more than the corresponding week last year and the five-year average -- 96 Bcf and 87Bcf, respectively.
The July gas contract traded Monday between $2.650/MMBtu and $2.759/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
