Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Natural Gas Roars Toward Record Monthly Gain on Searing US Heat

Commodities Jul 26, 2022 11:27AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Natural Gas Roars Toward Record Monthly Gain on Searing US Heat

(Bloomberg) -- US natural gas futures are surging toward the biggest monthly gain on record, buoyed by scorching weather and the expiration of August options. 

Gas has jumped more than 70% in July. Though the outage at the Freeport export plant in Texas has stranded gas in the domestic market, the bulk of that supply has been burned for power to cool homes and businesses amid blistering temperatures. Gas demand for power generation has jumped by more than 10% this month from a year ago to record levels, according to BloombergNEF data. 

Booming summer gas use and muted production growth from shale basins have left stockpiles of the fuel about 12% below normal, stoking concern about supply constraints in the colder months. The so-called widowmaker spread between gas delivered in March and April -- essentially a bet on how low inventories will be by the end of winter -- widened to the highest since 2006 for this time of year.

This summer is on pace to be the hottest in records going back to 1950 in the US, based on a measure of how the weather affects energy demand, according to Matt Rogers (NYSE:ROG), president of Commodity Weather Group LLC. 

Sign up here for Elements, Bloomberg’s daily energy and commodities newsletter.

The rally is bringing August gas call options that were nearly worthless into play a day ahead of expiration, adding further momentum to the rally as sellers of the options are forced to cover short positions. With futures now trading near $9.20 per million British thermal units, there were still about 12,000 contracts of $8.90-$9.10 calls outstanding as of Monday’s close. More than 25,000 $10 calls are still open.

Some traders with bearish wagers are getting squeezed amid the price surge, said Dennis Kissler, senior vice president at Bok Financial (NASDAQ:BOKF) Securities. The outlook for hotter-than-normal weather and concerns about further cuts in Russian supply to Europe -- a major destination for US gas exports -- mean “no one wants to be short,” he said.

The jump in prices underscores how volatile the gas market has been this year, with extreme heat across the globe further straining stockpiles as the war in Ukraine disrupts supply. In Europe, gas prices climbed to the highest level in more than four months, as the region braces for a further reduction in Russian supply that could severely dent efforts to keep the lights on and homes warm this winter. 

 

©2022 Bloomberg L.P.

 

Natural Gas Roars Toward Record Monthly Gain on Searing US Heat
 

Related Articles

Spain: New Gas Pipeline Could be Ready in 8 to 9 Months
Spain: New Gas Pipeline Could be Ready in 8 to 9 Months By Investing.com - Aug 12, 2022

By Scott Kanowsky  Investing.com -- A new gas pipeline connecting the Iberian peninsula and France may be ready by next summer and could be used to relieve potential energy supply...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email