Nymex Natural Gas Rises

Natural gas futures in New York rose as hot weather persisted in much of the U.S. Northwest and Northeast, driving up demand for electricity to power air conditioners.

Demand in the Northwest will be more than double normal levels for this time of year as temperatures soar, David Salmon of Belton, Missouri-based Weather Derivatives Inc. said in a report.

Portland, Oregon, is expected to have a high temperature today of 100 degrees Fahrenheit (38 Celsius) and 98 tomorrow. The normal high for this time of year is 80 degrees, according to the National Weather Service.

New York is forecast to reach 93 degrees today, about 11 degrees above normal, forecasters said.

``We've got a classic struggle between the bears and the bulls,'' said Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago. ``The bears are trying to take it lower because we're not going to have any hurricanes, and the bulls are saying it's very hot and we should see very strong electricity demand.''

Gas for August delivery jumped 8.9 cents, or 1.4 percent, to $6.499 per million British thermal units at 9:59 a.m. in trading on the New York Mercantile Exchange.

Flynn said there is a ``pretty good area of resistance'' at $6.55, and he's not certain there is enough momentum to allow gas to close at or above that point today. In electronic trading earlier today, gas touched $6.566 per million Btu before falling off.

Natural gas usage rises when there is hot weather as air conditioners prompt additional electricity demand typically met from gas-fired generating stations.

Mild Until Now

Relatively mild temperatures in the most populous U.S. regions has until this week allowed gas in storage to expand at a near-record pace and prices have fallen. As recently as June 15, Nymex natural gas ended the trading session at $8.06 per million Btu. The high thus far this year for the near-month contract occurred June 4, when gas closed at $8.191.

Gas in storage rose 78 billion cubic feet for the week ended June 29, the Energy Department said on July 6. The department will release its report for last week on July 12.

The supply increase reported last week pushed U.S. stockpiles to 2.521 trillion cubic feet for the week ended June 29, the government said. The surplus versus the five-year average stands at 17 percent.

source:bloomberg.com