Capstone Energy Services


US Gas Futures Continue To Rise On Hot Weather

July 13th, 2011

NEW YORK (Dow Jones) – Natural-gas futures rose Tuesday as forecasts for hot temperatures supported prices.

Natural gas for August delivery settled up 4.5 cents, or 1.1%, at $4.333 a million British thermal units on the New York Mercantile Exchange.

Futures rose for a third-straight session, reaching an intraday high of $4.35/MMBtu.

A heat wave took over the central and eastern parts of the country, and traders bet demand for natural gas would increase as more of the fuel is used to generate power for air conditioners.

Hot temperatures along with humidity made many cities in the southern half of the country feel like the temperature was in the triple digits.

Looking ahead, the East and West coasts aren’t expected to see as severe or sustained hot temperatures as the Midwest and South Central U.S., according to Commodity Weather Group’s six- to 10-day forecast.

Though temperature forecasts supported prices, analysts from Ritterbusch & Associates cautioned that price increases will be limited by a strong production pace.

Natural-gas production is expected to rise more than previously expected, the Energy Information Administration said in its Short Term Energy Outlook Tuesday.

Production is forecast to average 65.4 billion cubic feet a day in 2011, up 5.8% from last year. The forecast was up from last month’s prediction of 4.5% growth in output.

With the high production activity already known to the marketplace, the EIA report “wasn’t a surprise” to traders, said Tom Saal, a senior vice president of energy trading at INTL Hencorp Futures.

“As far as production goes, the market’s anticipating a pretty healthy production by shale [drilling],” Saal said.

Total gas consumption is forecast to increase by 2% in 2011 to 67.4 billion cubic feet a day, on higher demand from industrial and electric power consumers, the EIA said.

This slight increase in projected consumption helped the benchmark contract move up a little during the session before falling back, analyst Pax Saunders of Gelber & Associates said in a note.

“The fundamental problem is that weather backs off a bit after tomorrow,” Saunders said, which could pull prices down.

FUTURES                     SETTLEMENT                     NET CHANGE
Nymex August                  $4.333                                    +4.5c
Nymex September            $4.312                                    +3.5c
Nymex October                 $4.335                                    +3.3c

CASH HUB                             RANGE                          PREVIOUS DAY
Henry Hub                          $4.34-$4.395                        $4.3325-$4.425
Transco 65                          $4.365-$4.415                      $4.32-$4.41
Tex East M3                        $4.67-$4.72                          $4.70-$4.78
Transco Z6                          $4.86-$5.15                           $4.95-$5.65
SoCal                                   $4.24-$4.465                        $4.38-$4.46
El Paso Perm                       $4.24-$4.28                           $4.22-$4.25
El Paso SJ                           $4.12-$4.18                           $4.16-$4.18
Waha                                   $4.26-$4.32                           $4.20-$4.36
Katy                                     $4.30-$4.415                        $4.33-$4.41


By Amy D’Onofrio

Glossary Terms

Glossary Terms

Nominated Volume

The physical quantity of gas requested, typically in MMBtu/day, for a specific contract or for all contracts at a specific point.

Marketing Affiliate

A marketing company that has corporate ties to an interstate pipeline, an intrastate pipeline, or a local distribution company.

Energy Only Providers

Power marketers or other electricity vendors who provide and bill for only the energy component of the electricity consumed by the end-use customer.


A unit of heating value equivalent to 100,000 British thermal units (Btu).

Real Power

The component of electric power that performs work, typically measured in kilowatts (kW) or megawatts (MW)--sometimes referred to as Active Power.

Injection (Storage)

The process of delivering natural gas into a storage field for future delivery and use.

Price Ceiling

Statutory maximum lawful prices for various categories of natural gas, including gas destined for both the intrastate and interstate markets.

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Energy & the Environment

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How we assist clients in responding to national environmental concerns.

  • Initiate and manage a "Green" energy procurement program
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