16 July 2016, Houston — U.S. natural gas speculators boosted their net longs for a sixth week in seven, betting prices will rise as production eases and power demand remains high to meet air conditioning use during a hotter-than-normal start to the summer.
Speculators in four major NYMEX and ICE markets added to their bullish bets by 3,407 contracts to 103,348 in the week to July 12, the U.S. Commodity Futures Trading Commission said on Friday.
The market has gone back and forth between net long and net short over the past several months.
Gas futures on the NYMEX averaged $2.76 per million British thermal units during the five trading days ended July 12 versus $2.88 during the four trading days ended July 5.
There were only four trading days during the week ended July 5 due to the U.S. Fourth of July holiday.
To avoid filling storage caverns to their maximum capacity after a warm winter left stockpiles at record highs, analysts forecast prices would remain relatively low this year to pressure producers to cut output and encourage power generators to burn more gas instead of coal.
Spot gas prices at the Henry Hub benchmark have averaged $2.10 so far this year, while futures for the balance of 2016 were fetching $2.88. That compares with an average of $2.61 in 2015, the lowest since 1999.
Analysts said, however, they expect gas prices in 2017 to rise enough to encourage drillers to boost output again to meet forecast growth in U.S. pipeline and liquefied natural gas exports and industrial demand.
Gas futures for calendar 2017 were trading around $3.15.
*Scott DiSavino & Devika Krishna Kumar; Editing – Jonathan Oatis – Reuters