By June 19, 2016 Read More →

Speculators betting US natural gas prices on the rise

natural gasNatural gas futures for calendar 2017 were trading around $3.05

(Reuters) – U.S. natural gas speculators boosted their net longs for a third consecutive week, betting prices will rise as production eases and power demand picks up to absorb some of the record high amount of fuel left in inventories after a warm winter.

Speculators in four major NYMEX and ICE markets added to their bullish bets by 27,431 contracts to 81,821 in the week to June 14, the U.S. Commodity Futures Trading Commission said on Friday.

Gas futures on the NYMEX averaged $2.57 per mmBtu during the five trading days ended June 14 versus $2.42 during the five trading days ended June 7.

To avoid filling storage caverns to their maximum capacity after a warm winter left stockpiles at record highs, analysts said prices will likely remain 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 <GT-HH-IDX> have averaged $1.99 so far this year, while futures for the balance of 2016 were fetching $2.77.

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 $3.05.

(Reporting by Scott DiSavino Additional reporting by Jessica Resnick-Ault; Editing by James Dalgleish)

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