US natural gas surges on hot weather and threat of rail strike

Natural gas futures surged the most among major US-traded commodities as hot weather forecasts and a looming rail strike added to concern about tight supplies ahead of winter. 

Gas for October delivery soared as much as 11.5%, the biggest one-day gain since July 27. Prices for the heating and power-generation fuel have risen for five straight days, the longest winning-streak since May.

A US railroad strike would drastically reduce supplies of coal, forcing power generators to rely more heavily on natural gas as fuel. At the same time, a heat wave set to scorch an area stretching from Texas to New York over the next few days. The demand boost comes after extreme heat this summer left gas stockpiles well below normal levels for this time of year.

A lack of rail transportation could slash coal deliveries by the equivalent of roughly 17 billion cubic feet a day, or about 17% of US daily gas production, according to Enrique Gonzalez, a BloombergNEF analyst.

Soaring European gas prices also added momentum to US gas after EU policymakers unveiled a plan to deal with the energy crisis that shelved the idea of price caps.