Natural Gas Rises to Three-Month High in New York on Cold Weather Outlook

Natural gas futures rose to the highest price in almost four months as forecasts showed colder- than-normal weather in the U.S., boosting demand for the heating fuel.

Gas gained as temperatures in the U.S. East will be below normal from Dec. 1 to Dec. 5, according to the National Weather Service. The prior outlook showed normal weather across the East and above-normal temperatures in the Northeast.

“The six-to-10-day forecast is showing some below-normal temperatures across the country and the market is reacting to the cold weather,” said Michael Rose, director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida.

Natural gas for January delivery advanced 1.1 cents, or 0.3 percent, to $4.399 per million British thermal units on the New York Mercantile Exchange in its first trading day as a front- month contract, the highest settlement price since Aug. 6. The December contract expired at $4.267 on Nov. 24.

About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.

Boston will have a low of 28 degrees Fahrenheit (minus 2 Celsius) on Dec. 4, 4 degrees below average, according to AccuWeather Inc. in State College, Pennsylvania. New York will have a low of 33 degrees, 2 degrees below normal.

Forecast models are also showing temperatures to be below normal across the country from Dec. 6 to Dec. 10, according to Commodity Weather Group LLC in Bethesda, Maryland.

Stockpile Decline

Gas inventories dropped 6 billion cubic feet in the week ended Nov. 19 to 3.837 trillion cubic feet, the Energy Department said on Nov. 24. A surplus to the five-year average rose to 9.5 percent from 9.3 percent the previous week.

“We still don’t see clear-cut government data that support strong industrial demand,” Rose said.

The number of rigs operating in the U.S. rose this week, led by an increase in natural-gas rigs, according to data published by Baker Hughes Inc.

The rig count gained for the fourth time in five weeks, rising 10 to 1,687, Houston-based Baker Hughes said on Nov. 24. Gas rigs climbed 17 to 953, the biggest increase in six months.

Oil rigs fell seven to 724, the first decline in five weeks, from the highest level since December 1987.

The Energy Department will release its monthly EIA-914 report on Nov. 29. Last month’s report showed U.S. total gas production gained 1.6 percent to 72.38 billion cubic feet a day in August.

Production Report

Output in lower-48 states rose 1.8 percent to 65.79 billion cubic feet, the report showed.

The EIA-914 report covers gas gross withdrawals, which include gas used for repressuring, quantities vented and flared, and non-hydrocarbon gas removed in treating or processing operations.

Gas futures volume in electronic trading on the Nymex was 67,072 as of 1:44 p.m., compared with a three-month average of 274,000. Volume was 239,965 on Nov. 24. Open interest was 749,111 contracts, compared with the three-month average of 802,000. The exchange has a one-business-day delay in reporting open interest and full volume data.

To contact the reporter on this story: Moming Zhou in New York at Mzhou29@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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