EG: U.S. GAS: Futures Near Flat As Debby Threat Passes
--Natural-gas prices stall ahead of July contract expiration
--Traders watch for return of Gulf production
--Forecasts call for "extreme" heat over the next week
By Jerry A. DiColo
NEW YORK--Natural gas futures held near flat Tuesday ahead of the expiration of the July contract, as investors keep watch on the Gulf of Mexico for signs of returning gas production.
Natural gas for July delivery rose 0.5 cent to recently trade at $2.699 a million British thermal units on the New York Mercantile Exchange, after trading as high as $2.719/MMBtu earlier in the session.
The more heavily traded August contract recently rose 0.3% to $2.741/MMBtu.
Tropical Storm Debby remains stuck off the coast of the Florida panhandle, according to the National Hurricane Center, and is expected to move over land in the next couple of days. The storm is east of the major oil and gas producing areas of the Gulf, and traders expect most drilling rigs to quickly return to production after the storm shut 34.8% of the Gulf's gas output as of midday Monday.
"It's bringing a lot of rain to the southeast, so at this point it's lowering demand rather than supply," said Tom Saal, a broker at INTL Hencorp Futures.
Offshore production in the Gulf accounts for 12% of U.S. natural-gas production, according to the U.S. Energy Information Administration, so prices often rise when storms threaten output in the region.
Futures rose to the highest level in a month on Monday, breaking above $2.70 intraday for the first time since May 24. Since late April, gas futures have remained in a range between $2.20 and $2.75 as investors weigh high supplies with rising demand from utilities that have switched to burning natural gas instead of more expensive coal.
Despite the rains brought by Debby, temperatures across the U.S. are expected to rise well above normal for the next two weeks, according to MDA EarthSat. The forecaster said Tuesday that the central U.S. is "likely to see ongoing extreme" temperatures, while the mid-Atlantic region "will remain pretty hot as well."
Rising temperatures typically boost natural-gas prices, as increased use of air-conditioning raises demand for the fuel.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.72/MMBtu, according to IntercontinentalExchange, compared with Monday's average of $2.6953/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $2.835/MMBtu, up from $2.8168/MMBtu.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com
