On Thursday, natural gas prices were given a boost as the US dollar weakened after Federal Reserve Chairman Powell stated a testimony.
Natural gas futures for July delivery increased by 0.89% to $2.62 per metric million British thermal units on June 22.
The fuel gained support from the negative movement of the US dollar. The currency dropped after US Fed Chairman Jerome Powell’s testimony to Congress.
Despite his reiterating the statement that they need rate hikes, the dollar’s rally failed to last. The event led to its drop.
Mainly, the commodity is priced and traded in US dollars. As a result, a decline in the currency can give benefits to prices.
According to analysts, gas demand could outrun supply if the week’s unexpected warm weather continues. They added that if temperatures go upside, it can cause pressure and support prices.
After a sharp decline in the previous sessions, hotter weather could prevent further price drops. Texas temperatures are expected to weigh on gas supplies for air conditioning.
On the other hand, there is a deal between a Romanian gas operator and a Southern European producer on a new platform. This could ease demand concerns in the region.
In addition, the continuous Atlantic hurricane season in America can strengthen US gas demand.
Texas Heat Drives Gas Prices Up
An expected higher demand due to hot weather conditions and small outputs supported gas prices. Also, lesser flows to LNG export plants during maintenance outages stabilized prices.
Hot temperatures in Texas boosted power prices. This was led by the state’s forecast of record-breaking air conditioning demand in the summer heat wave.
Furthermore, higher demand could heavily depend on gas plants for electric supply. Moreover, the recent price increase led to a one-year high in overall futures volume. In addition, speculators anticipate more cost increases.
However, profit-taking and technical indicators made the temporary retreats possible. The price stability can be attributed to the decrease in gas flow to export plants.