Natural gas prices and commodity-related exchange traded funds are perking up as forecasts for hotter weather ahead raise expectations for higher electricity consumption.
The United States Natural Gas Fund (NYSEArca: UNG) rose 3.5% on Monday as Nymex natural gas futures were up 3.8% to $2.68 per million British thermal units. Despite recent gains, UNG has declined 11.4% year-to-date.
Fueling the spike in natural gas prices, WSI Corp. said that weather outlooks called for “another round of elevated heating and humidity across the eastern U.S.” in the next six to 10 days, reports Nicole Friedman for the Wall Street Journal. Commodity Weather Group also expects hotter-than-anticipated weather for the following five days.
Consequently, traders are anticipating the sweltering heat could raise natural-gas consumption as households and offices use more gas-powered electricity to run air-conditioning units.[related_stories]
“Power burns are still expected to be strong this week…as the consuming centers in the Northeast and South are still experiencing hot weather,” consulting firm Energy Aspects said in a note.