Investing.com - U.S. natural gas futures surged to a ten-month high on Tuesday, as forecasts for continued above-normal temperatures across most parts of the U.S. throughout most of summer raised expectations for power generation demand to meet air conditioning needs.
Updated forecasts released Monday said 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 $2.865 per million British thermal units, the most since August 13. It last stood at $2.825 by 14:32GMT, or 10:32AM ET, up 8.4 cents, or 3.06%.
A day earlier, gas futures rose 4.7 cents, or 1.74%. Natural gas prices are up nearly 40% 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 in a range between 43 to 53 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 94 cents, or 2.03%, to trade at $47.27 a barrel, while heating oil for August delivery tacked on 1.91% to trade at $1.469 per gallon.