September delivery of natural gas spiked on Aug. 19 following expectations that the Midwest would experience a significant heat wave in the coming week, spurring a jump in regional usage of air conditioning to stay cool. On the expectation of increased consumption, natural gas jumped 12 cents to hit $3.46 per million British Thermal Units.
Natural gas prices are notoriously volatile, and this summer has been no exception. The Midwest previously experienced a heat wave in mid July that caused prices to spike. On Aug. 9, natural gas hit a five-month low amid concerns there would be an inventory surplus due to mild weather. The commodity, at the time, had lost 25 percent of its value from that high in April. But with the expected return of soaring temperatures in Middle America, gas prices have shot back up to their highest price since July 29.
In a note, energy management advisors Tradition Energy said the "rally could continue" in the coming week as traders fully assess the impact of the expected heat wave.
Natural gas ETFs shot up across the board on the price uptick. The popular United States Natural Gas (UNG) was up 2.74 percent to hit $18.35 on the day. ProShares Ultra DJ-UBS Natural Gas ($BOIL) jumped 5.54 percent to hit $33.36 a share.
VelocityShares 3x Long Natural Gas ETN (UGAZ) was the big winner on the day, shooting up 8.14 percent to hit $16.07 a share.
[image courtesy of Flickr Creative Commons]
Read Next
