Natural gas jumps on signs of rising demand
BY JERRY A. DICOLO
NEW YORK -- Natural gas futures rose more than 2% as investors focused on signs of increasing gas demand.
Weather forecasts for the United States are calling for hot and humid temperatures across the Midwest and East Coast over the next week, increasing energy demand as homes and businesses turn on air conditioning.
Additionally, the approval by the Obama administration late last week of a second terminal to export natural gas has convinced some investors that higher prices are ahead.
Private forecaster Commodity Weather Group LLC said a humid-air mass will expand across the eastern half of the United States this week "offering some uncomfortable heat index levels" that could reach above 90 degrees.
Hot weather could help slow the sharp increase in United States natural gas stockpiles over the past two weeks that have surprised analysts and led to a slump in gas prices from highs above $4.40 MMBtu in April.
This spring' s temperature shifts have proven dramatic, Jim Ritterbusch, Head of oil trading advisor Ritterbusch & Associates, said in a research report. "The market is being forced to price in a significant slowing in storage injections."
The Energy Department approved a plan to export 1.4 Bcfpd of LNG from the Freeport LNG facility in Texas, the second such approval granted in the United States.
Morgan Stanley analysts said that the United States could begin exporting LNG as soon as 2015, and the country is on track to export 3.6 Bcfpd by 2018.
You can' t build an export plant in a day, but it certainly has made me more bullish over the long term on the price of gas said Rich Soultanian, Co President of NUS Consulting, which manages corporate energy purchases.
Dow Jones Newswires