Natural Gas Rises as Warmer Weather Is forecast : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

07/07 16:27 Natural Gas Rises as Warmer Weather Is Seen Increasing Demand By Mark Shenk

New York, July 7 (Bloomberg) -- Natural gas climbed almost 5 percent on expectations that hotter-than-average weather forecast for much of the country next week will spur utilities to burn more fuel to generate power for air conditioning.

Cooling demand is expected to be 34 percent above normal in the U.S. Midwest over the next seven days, according to Weather Derivatives, a Belton, Missouri-based forecasting firm. During hot weather, utilities make greater use of gas-fired generating plants as demand for electricity soars.

``We are expecting some warmer temperatures in the Midwest next week,'' said Tom Pena, a trader at Starsupply Petroleum Inc. in Englewood, New Jersey. ``This helped us recover from the pretty big slide on Wednesday.''

Natural gas for August delivery rose 19.6 cents, or 4.8 percent, to $4.262 per million British thermal units on the New York Mercantile Exchange. While prices have fallen 9 percent from the record of $4.715 set June 27, and are down almost 5 percent this week, they still are double levels a year ago.

Prices could stay in their current range of $4 to $4.50 per million Btu until next spring ``unless demonstrable improvements in North American gas production materialize soon,'' the Energy Department's Energy Information Administration forecast in its monthly Short-Term Energy Outlook today.

Gas fell more than 8 percent on Wednesday, the biggest drop in two weeks, as a plunge in crude oil depressed prices for petroleum products that compete with gas. Some power companies can switch between burning gas and petroleum fuels, depending on price.

Air conditioner use should increase next week as above-normal temperatures are forecast for most of the U.S. west of the Mississippi River, the National Weather Service said in a six-to- 10-day forecast released late today.

-- Martin Thompson (, July 07, 2000

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