Gas prices rise as heat drives power-plant demand
Gas storage levels fell to 22% above the five-year average from 26%. The surplus developed because of milder-than-normal weather last winter that left more gas in inventories at the end of the season. Analysts and traders looking ahead to this week's supply report said a below-normal increase is likely because of the hot weather last week, which will further erode the excess supply. „This surplus could be vulnerable,” said James Grandefeld, a futures broker at TFS Energy LLC in Stamford, Connecticut. „You could easily take 240 billion cubic feet out of the surplus” by the end of the summer should the weather stay hot, he said. Gas stocks were 490 billion cubic feet higher than the average for the past five years in last week's report. „Eight weeks ago it looked like we were going to significantly overfill storage,” said David Pursell, president of Pickering Energy Partners Inc. in Houston. „If this hot weather hangs around for a while, you may not overfill storage. You may just barely fill storage.”
The commodity has dropped over that period just once, when it fell 4.2% in 2003. There's a „seasonal tendency for natural-gas futures to rally from the end of July,” said Veronique Lashinski, an analyst with Fimat USA Inc. in Chicago.
„To think that we're going to get through the next eight weeks without a hurricane is wishful thinking,” said Michael Rose, trading director at Angus Jackson Inc. in Fort Lauderdale, Florida. Last week's rally may mean prices would reach $8 per million, but by the end of next month, according to technical analysis from Rodney Dow, president and founder of Garrison, New York-based broker and consultant Dow Corp. (Bloomberg)
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