The NYMEX October natural gas futures contract jumped 12.2 cents Monday to settle at $3.146/MMBtu, with warmer-than-average weather expected to persist through the end of September across major demand areas.
The 12.2-cent climb brings the front-month contract to its highest point since May 26, when the gas contract settled at $3.236/MMBtu.
Gene McGillian, manager of market research at Tradition Energy, said "late-season cooling demand" is driving the market jump.
The most recent six- to 10-day outlook from the National Weather Service calls for a high likelihood of warmer-than-average weather across the eastern half of the country, including major demand areas Chicago and New York.
This continued late-season cooling demand could be giving a boost to the market as storage sits at an estimated 1.3% surplus to the five-year average, according to Energy Information Administration data. McGillian said it is possible stocks will be at their lowest point in three years heading into the winter months.
Although weather outlooks currently are bullish, McGillian said production is at record levels, which could put pressure on any gains seen from the boost in cooling demand.
According to Platts Analytics' Bentek Energy data, US dry production climbed to 74.4 Bcf/d Saturday, well above the 71.5 Bcf/d year-to-date average.
Mexican exports and LNG feedgas have been more prevalent through 2017 than what was seen this time last year, totaling 5.9 Bcf/d year to date, 1.8 Bcf/d above this time in 2016, according to Platts Analytics.
As power demand approaches normal in the Southeast as it recovers from Irma, the National Hurricane Center is closely monitoring Hurricane Jose in the Atlantic.
Jose is expected to provide rainfall and wind to the Northeast, but current projections have the storm's center avoiding landfall with the US, according to the NHC.
Hurricane Maria also is churning in the Atlantic, but any potential impact to the US is not expected to occur until the start of next week.
The NYMEX settlement price is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
