Temperatures showed no signs of abating Monday as the heat wave of the past two weeks moved forward with readings topping 100 degrees in a number of regions. As a result, September natural gas futures jumped higher in Sunday night’s Access trading session and kept the momentum rolling into Monday. The contract settled the day at $8.211, up $1.027 from Friday’s close.

Just after noon EDT on Monday, prompt month natural gas was trading north of $8, a price level unseen by a front contract in months. Later in the afternoon, September natural gas put in a high of $8.260 before coming to a close. The last time a prompt month traded higher was back on April 19 when the May futures contract reached a high of $8.280.

“I think we saw massive short-covering that just kind of fed off of itself,” said a Washington, DC-based broker. “The weather forecast remains bullish. Overall, it feels like this market is better supported and we will likely be reacting until we get some sort of break in the weather. According to the National Weather Service’s eight-to-14-day outlook, that break isn’t out there just yet.”

The broker noted that the natural gas trading ring was abuzz with activity Monday. “According to the floor, we hit a ton of stops,” she said. “I know I had some of my end-users putting stops in above the market just in case they got filled. There are probably people wondering now why they didn’t buy this thing a dollar cheaper a week ago.”

Despite the surge of strength Monday, the broker warned of potential corrections. “A lot of times when you come this far, this furious, you could follow through, but you could also correct very violently,” she said. “This is not as nice of a gain as it would have been if we had gained 20 cents a day for a week. The move was so violent Monday that a lot of the shorts got out in one day, so we will see what comes next. My guess is that we will get a correction here. The question is when and how much.”

Labeling the weather “hot, hot, hot,” Citigroup analyst Tim Evans said natural gas futures took advantage of the thin volume of the Sunday overnight Access session to spike, impressed that the heat was sufficient to limit storage injections.

“Although it was indeed plenty hot over the weekend, the actual cooling degree days for the past week were a step down from the prior period that we think will allow a net build in storage in Thursday’s report, with our 20-30 Bcf guess more or less an average of last week’s 7 Bcf withdrawal and the prior week’s 59 Bcf build.”

The analyst added that tropical storm potential is also lending a hand to price strength. “The threat to supply from the tropics remains more potential than actual, but conditions are becoming more favorable to storm development and the market is taking notice,” Evans said.

However, the primary reason behind skyrocketing natural gas futures prices is the excessive heat, which has air-conditioning load running overtime from Los Angeles to New York City. “The deadly heat wave that brought two weeks of triple-digit heat to the West is moving across the Plains and into the East,” AccuWeather said on Monday. “Heat advisories and excessive heat watches and warnings are in effect across the Midwest, central Mississippi Valley and the Northeast as the combination of high heat and humidity could lead to serious health problems.”

The State College, PA-based forecasting firm warned that this week could be even worse than the last two. “Just two weeks ago, extreme heat engulfed the eastern half of the nation,” the company said. “AccuWeather.com is forecasting temperatures will be even higher during this heat wave.”

MDA EarthSat Energy Weather also warned that temperatures this week will be more severe than those experienced over the last two weeks. “Powerful heat will be affecting major population centers from Chicago to New York City simultaneously by [Tuesday], which will create significant strain on power supplies,” said Matt Rogers, deputy director for MDA EarthSat Energy Weather. “This is the same or stronger than the heat event of two weeks ago.” He pointed out that Minneapolis reached 99 degrees Sunday and was expected to reach 102 degrees Monday afternoon. Rogers added that the last time Minneapolis reached more than 100 degrees was in 1995. Chicago was also on course to tie a record of 99 degrees Monday afternoon. The record was set back in 1945.

The East is also in for a hot one, according to Rogers. “The East Coast should expect its hottest conditions on Wednesday with upper 90s to lower 100s from Boston to DC,” he said. “The Midwest should see the introduction of thunderstorms by this point, though with relief to follow.” Before this cold front reaches the East Coast late this week, Rogers said, both Philadelphia and DC are forecast to reach 101 degrees (establishing new record highs), and heat indices could reach dangerous levels — around 110 degrees.

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