(Bloomberg) -- U.S. natural gas futures are having their best May rally since 2010 as hot weather boosts demand for the power plant fuel, slowing efforts to refill depleted inventories.
Prices rose to a four-month high after the Energy Information Administration reported inventories rose by 96 billion cubic feet last week to 1.725 trillion. The median estimate by analysts predicted a gain of 102 billion. The slower pace means storage is about 23 percent below the five-year average, the most for the time of year since 2014.
Gas is barreling toward $3 per million British thermal units as unexpectedly hot weather this month quickly followed a cold April. The temperature swing is hindering the normal seasonal ramp-up of the fuel flowing into storage caverns. Forecasts show the heat will persist, and intensify in places like Texas, into mid-June. Even so, market gains have been capped as production climbs to new records this year.
“People are concerned that if the weather continues to be hot, we are going to see some low injections,” said Kent Bayazitoglu, an analyst at Gelber & Associates in Houston. “The market is really going to want to see those triple-digit injections to really calm the market down.”
Gas futures for July delivery rose 6.7 cents to $2.952 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 31. Futures advanced 6.8 percent this month, the most since August and the highest for any May since 2010.
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