natural gas

Long positions in U.S. natural gas futures have witnessed their first notable weekly gain for July, bolstered by soaring power burns triggered by surging air-conditioning demand during the scorching summer.

The most-active August gas contract on the New York Mercantile Exchange’s Henry Hub concluded Friday’s session with a 1.6% decline at $2.7130 per mmBtu, after experiencing a nearly 6% increase in the previous session, as some profit-taking took place.

However, the benchmark gas contract displayed resilience throughout the week, posting an impressive 8.3% surge, a stark contrast to the previous weeks that saw losses of 1.7% and 7.7%.

Experts at Houston-based energy markets advisory, Gelber & Associates, attributed much of this week’s rally to the volatile power burns, which saw reporting authorities continuously revising their numbers due to challenges in accurately measuring the impact of the extreme heat and subsequent energy usage.

“Another significant drop in power burn was reported today, with a decrease of 2.37 bcf/d (billion cubic feet on the day),” stated Gelber’s analysts. “This marks the latest in a series of such declines this week, with previously released power burn figures being repeatedly revised by data providers.”

“After data revisions, power burn is estimated to be at 46.7 Bcf/d, which remains remarkably high for this time of year.”

Furthermore, market sentiment received an additional boost this week from Vladimir Putin’s move to navigate around Western sanctions on Russian gas by demanding fertilizer deliveries in exchange for reinstating the Black Sea Grain Initiative that the Kremlin had previously withdrawn from.

This development led to a substantial rally in the Henry Hub on Thursday, as a successful outcome would likely reduce global gas stockpiling.

However, tensions escalated as Russia’s artillery targeted Ukrainian food export facilities and its navy seized ships in the Black Sea, creating geopolitical uncertainties.

Despite these actions, the West has not relented on the sanctions, while Turkey, a critical link for Russian exports, is urging Moscow to reconsider the Black Sea deal due to potential food supply issues and the global crisis caused by Putin’s actions.

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