Natural-gas futures experienced a significant rally on Thursday, with prices for the commodity soaring nearly 6% in a single session. This marks the largest daily gain since mid-June. The surge in prices can be attributed to several factors, including the persistent heatwave and mounting expectations of unseasonal declines in natural-gas supply.
According to Phil Flynn, a senior market analyst at The Price Futures Group, the relentless heat and projected drop in the U.S. rig count are contributing to this price hike. If the current heatwave extends into August, as some experts predict, and the rig count continues to decline, it is very likely that this winter will bring higher-than-anticipated costs for consumers.
Meanwhile, oil prices also saw an increase. In a newsletter published on Thursday, analysts at Sevens Report Research noted that the sustainability of trading WTI crude above $80 per barrel in the near future will heavily depend on global demand and supply dynamics.
The settlement for August natural gas (NGQ23) stood at $2.76 per million British thermal units, having gained 15 cents or 5.9%. On the other hand, West Texas Intermediate crude for August delivery (CLQ23) closed at $75.63 per barrel on the New York Mercantile Exchange, rising by 28 cents or 0.4% during the session.
This recent surge in natural gas prices underscores the increasing demand for the commodity and raises concerns about supply adequacy. As we move forward, market participants will closely monitor these factors to determine the course of natural gas and oil prices.