Natural gas futures for September ’15 delivery were almost two cents higher Tuesday morning as traders and investors weighed the current week’s heat with forecasting models of a cooler August.
Prices were at $2.81 per mmBtu in early trading Tuesday.
Natural gas demand will be particularly higher on Tuesday and Wednesday as warm temperatures engulf most of the country. Relative warmth will continue through the first three days of August before warmer temperatures in the Midwest and Northeast give way to cooler temperatures late this week.
Accordingly, Bentek Energy predicts that power burn demand will decline approximately 2 Bcf per day by the week’s end due to cooler temperatures.
While natural gas traded higher on Tuesday, traders seemed cautious on pushing prices past the resistance level of $2.82 per mmBtu.
“Thursday’s storage report is in focus because we could potentially see a bullish injection in the 40’s,” said one New York floor trader. “At the same time, the market is cautious of models in August that show substantial cooling in northern parts of the country.”
While the most active contract is now the September ’15 delivery contract, the August contract is set to settle on Wednesday. Options for the August contract expire today, which could add to potential volatility.
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