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U.S. natural gas futures surrendered part of the previous session’s gains on Tuesday, while spot natural gas prices in Texas fell below zero for the first time since May.
The forecast for the next two weeks “remains rather hot and with a bullish lean most days,” NatGasWeather.com wrote, according to Dow Jones, noting that demand for electricity to power air conditioning has lifted gas use, helping to erode the large gas storage surplus.
But the forecaster added that both U.S. and European models overestimated heat last summer, “and the expectation is they are doing so again this summer.”
Front-month Nymex July natural gas (NG1:COM) closed -1.9% at $2.756/MMBtu, its seventh decline in the past nine sessions.
ETFs: (NYSEARCA:UNG), (BOIL), (KOLD), (UNL), (FCG)
Next-day gas prices at the Waha hub fell to negative $1/MMBtu, down from a positive $0.22, according to Reuters; it was the 18th time this year that Waha prices were negative and compares with averages of positive $1.07/MMBtu so far in June, positive $0.19 in May, positive $0.86 YTD, and positive $1.82 in 2023.
Negative prices usually occur in spring and fall when demand for heating and cooling is lower, seldom during a summer heat wave that forces power generators to burn more gas to produce electricity to keep air conditioners going.
Energy traders reportedly blamed the latest negative prices, at least in part, on maintenance expected to limit the capacity of Kinder Morgan’s (KMI) 2.7B cf/day Permian Highway gas pipeline to ~2.5B cf/day on June 25-26.