Investing.com - U.S. natural gas futures rallied for the third straight session on Wednesday, to hit the highest level in more than a year as hot summer temperatures across most parts of the U.S. raised expectations for power generation demand to meet air conditioning needs.
Updated weather forecasting models suggested that temperatures may be hotter than normal throughout most of the contiguous U.S. from July 8 through July 12.
Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.
Natural gas for delivery in August on the New York Mercantile Exchange rose to an intraday peak of $2.974 per million British thermal units, the most since May 21. It last stood at $2.891 by 14:35GMT, or 10:35AM ET, up 0.1 cents, or 0.03%.
A day earlier, gas futures surged 14.9 cents, or 5.44%. Natural gas prices are up nearly 45% since late May as expectations have grown that hot summer weather will lead to heavy demand.
Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
Meanwhile, traders looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the fuel.
The U.S. Energy Information Administration's storage report slated for release on Thursday is expected to show a build of 48 billion cubic feet for the week ending June 24.
That compared with builds of 62 billion cubic feet in the prior week, 73 billion a year earlier and a five-year average of 78 billion cubic feet.
Total U.S. natural gas storage stood at 3.103 trillion cubic feet, 19.9% higher than levels at this time a year ago and 21.9% above the five-year average for this time of year.
Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.
Elsewhere on the Nymex, crude oil for delivery in August advanced 49 cents, or 1.02%, to trade at $48.34 a barrel, while heating oil for August delivery tacked on 1.43% to trade at $1.505 per gallon.