Natural Gas Bulls Bet on July Revival as Heat, Grills Turn Up
Geert Rouwenhorst, the Yale professor who grandfathered the theory of commodity index investing, used to get plenty of laughs from his audience when he’d tell them that many didn’t know the correlation between pork belly futures and natural gas until they began barbecuing.
With the 4th of July coming up — the most popular U.S. holiday for grilling — it's perhaps opportune to remind our readers of the correlation between natural gas demand and the Independence Day celebration. A poll says nearly 70% of American grill owners hold home parties on this occasion, first barbecuing on the deck or backyard, then chilling indoors.
More than the gas used for cooking that day, what matters will be what’s burned for power and air-conditioning use — not just on the 4th but through the rest of summer, as the holiday typically ushers in the warmest temperatures one would experience for the year.
While this summer hasn’t hit its baking point yet across the United States, temperatures in Texas and other southern states have reached 100+ degrees Fahrenheit earlier than expected and heat is expected to start permeating the rest of the lower 48 States in the coming weeks, weather trackers say.
Gelber & Associates, a Houston-based energy markets advisory, told its clients in natural gas earlier this week that since this year’s Independence Day celebration was in mid-week, “producers are front-loading maintenance to account for the holiday. As a result, about 1.5 bcf/d (billion cubic feet per day) of production has gone off line in advance as a part of their preparation.”
It has been an interesting time for natural gas, with bulls managing to keep the market in the positive for most of the month despite the mixed heat trends across the
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