Natural-gas futures edged higher Monday, as forecasts for warmer temperatures to come weighed on the market.
Natural gas for August delivery recently traded up 4.6 cents, or 1%, to $4.445 a million British thermal units on the New York Mercantile Exchange.
Futures fell slightly early Monday but reversed course as traders looked past some moderating temperatures to more heat forecasts supportive of prices.
The central U.S. is still under a dome of heat, and hotter weather is predicted to return to the East later this week. That heat event should be less intense compared to last week's heat wave, Commodity Weather Group said.
The Plains will still see above-normal temperatures in the 11- to 15-day forecast, the private forecaster said.
High natural-gas production is still limiting the upside for futures, said Cameron Horwitz, an analyst with Canaccord Genuity in Houston.
The number of rigs drilling for natural gas has risen by 16 in the last two weeks, making the Baker Hughes Inc. (BHI) total count of 889 closer to 900, rather than nearer the 800 count market participants had expected to see come, Horwitz said.
"People are waiting to kind of see which one wins out," he said of the opposing factors weighing on natural gas.
The upside resistance for futures in the near term is between $4.50 and $4.55, Horwitz said.
"[A] return to $4.50 pricing is certainly possible until the storage data provides fresh impetus later in the week," Jim Ritterbusch, head of trading advisory firm Ritterbusch & Associates, said in a client note.
Robust supply has been visible in recent weekly storage data for natural gas, with some larger injections than expected.
Last week's heat wave is expected to result in a smaller weekly storage injection report on Thursday, however, as demand for gas-fired power rose.
Electricity demand rose to record levels in the Midwest and East last week as Americans used more power for cooling needs. Demand for natural gas tends to fluctuate in the summer as the power-plant fuel is used to generate electricity to help power air conditioning.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.5075/MMBtu, according to the IntercontinentalExchange, up 4.6 cents from Friday's average. Natural gas for Tuesday delivery at Transcontinental Zone 6 in New York traded at $5.02/MMBtu, down about $1.42 from Friday's average.