The NYMEX August natural gas futures contract settled above the $3.00/MMBtu level on Friday, rising 8.2 cents to close at $3.081/MMBtu after the National Weather Service issued a forecast for above-average August temperatures across the US.
It was the first time the front-month gas contract had settled above the $3/MMBtu in over six months. The last time a front-month contract did so was on January 9, when the then prompt month, February, closed at $3.011/MMBtu. The last time a front-month contract settled any higher than it did on Friday was on January 4, when the close was $3.096/MMBtu.
Warmer-than-normal summer weather with cooling degree days 19% above normal and 4% higher year on year has led to working gas storage levels below Wall Street estimates, analysts with financial services firm Robert W. Baird said.
But according to sources, the weather forecast will only be supportive in the short term. "Once the heat breaks, producers will face additional pressure to curtail output to avoid a retest of the spring lows, an action that does not appear to be forthcoming," said Mike Fitzpatrick, an analyst with the Kilduff Report.
The contract traded between $2.984/MMBtu and $3.091/MMBtu Friday.
