On its second day as the front-month, gas futures for September delivery on the New York Mercantile Exchange rose 8.1 cents, or 3.8%, to $2.218 per million British thermal units by 10:09 a.m. EDT (1409 GMT). In the previous session the contract slipped to $2.107, its lowest level since May 2016.
The contract gained today on technical buying after prices bounced off the key support area of $2.10 in the previous session, Phil Flynn, senior analyst at Price Futures Group in Chicago said adding, investors rolling over positions from August contract is playing into that support.
"Lot of times, when you change from front month to different month, that does create some short time opportunities to cover shorts and pick a bottom," Flynn said. Analysts said the front-month has traded around multi-year lows since late May as near-record production and a mild spring allowed utilities to inject huge amounts of gas into storage, shrinking a massive inventory deficit and removing concern about shortages next winter.
The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019. But with production near record highs, analysts expect stockpiles will reach a near-normal 3.7 trillion cubic feet (tcf) by the end of the summer injection season on October 31.
Gas production in the Lower 48 US states slipped to 89.7 bcfd on Tuesday, from a three-week high of 90.7 bcfd hit on Monday, according to energy data provider Refinitiv. However, it held close to an all-time daily high of 91.1 bcfd, scaled on July 5, and an average of 83.1 bcfd during this week last year.
Refinitiv projected demand in the Lower 48 would rise from 90.8 bcfd this week to 91.2 bcfd next week as power generators burn a little more fuel to meet higher air conditioning use and more gas flows to the nation's LNG export terminals. Gas prices for Wednesday at the Henry Hub held at $2.22 per mmBtu, their lowest since November 2016 as moderate weather across much of the country caused demand for the fuel for cooling to decline.