MercoPress. South Atlantic News Agency

Tropical Storm Chris sends natural gas price rising

Natural gas prices soared on Wednesday, nearing a six- month high, on concern that Tropical Storm Chris would disrupt production in the Gulf of Mexico just as a heat wave in the eastern United States spurred record demand for electricity for air conditioning.

The threat of the storm, which was forecast to become a hurricane on Wednesday or Thursday, coincided with the worst heat wave in five years in the northeastern United States. Power plants burn more gas during periods of hot weather to cool offices and homes.

"Prices are up sharply on dual concerns - the potential threat to supply from an imminent Hurricane Chris and a surge in weather-induced demand," said Jason Schenker, an economist with Wachovia in Charlotte, North Carolina. "The prospect of a hurricane that could shut in production is exacerbating price moves."

Natural gas for September delivery rose 22.5 cents to $7.79 per million British thermal units on the New York Mercantile Exchange. It has rallied 13 percent this week, reaching $8.545 earlier in the session, nearing its highest level since Feb. 6.

Natural gas has soared 49 percent in the past two weeks, rallying from near- lows for the year after a summer heat wave hit nationwide. Before the rally, natural gas had plunged 51 percent this year because of soaring inventories after demand was cut by mild weather in winter and spring.

Crude oil prices rose to their highest level in more than two weeks on concern that the storm could threaten oil fields in the Gulf of Mexico. Crude for September delivery climbed 90 cents to $75.81 a barrel in New York.

Meanwhile, gold rose to a two-week high as rising energy costs enhanced its appeal as an inflation hedge.

"The focus is on the energies," said Matt McKinney at Infinity Brokerage Services in Chicago. "Fundamentally, we're going to see higher gold prices as long as energies continue to go up and there are fears of inflation." Gold futures for December rose $5.30 to $664.10 an ounce on the Comex division of the New York Mercantile Exchange.