Heat wave jumps US gas contracts 10%

US natural gas futures jumped nearly 10% on Wednesday, to a five-week high, on expectations of sweltering weather over the next two weeks that will increase the use of air coolers and demand for electricity from gas-fired plants following a recent drop in production.

The heat wave has already raised demand for electricity to record levels in a few regions of the United States, including Texas.

The price increase came despite a drop in gas values for LNG export plants in Louisiana and the continued shutdown of the Freeport plant in Texas, leaving more fuel in the US.

Freeport is the second largest LNG export plant in the United States, and was consuming regarding two billion cubic feet per day of gas before it closed on June 8.

Gas prices for August delivery on the NYMEX rose 74.3 cents, or 10.2%, to settle at $8.007 per million British thermal units, the highest closing level since June 13.

In a year that is already witnessing sharp trading volatility, today’s price gains are only the largest one-day percentage increase since early July.

So far this year, US gas contracts to the nearest maturity are up regarding 115 percent because much higher prices in Europe and Asia keep demand for US LNG exports strong, especially since the war in Ukraine and fears of cutting Russian gas supplies to Europe.

Gas is traded around $48 per million thermal units in Europe and $38 in Asia.

Heat wave jumps US gas contracts 10%

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Heat wave jumps US gas contracts 10%

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