Natural Gas Futures Climb on Forecasts of Colder Midwest Weather

Natural gas futures advanced in New York for the third time in four days on forecasts of below- normal temperatures in the central U.S. that would increase demand for the heating fuel and reduce stockpiles.

Gas gained after Commodity Weather Group LLC in Bethesda, Maryland, predicted colder-than-usual weather in parts of the upper Midwest from Feb. 14 through Feb. 18. Gas inventories were 12 percent above the five-year average in the week ended Jan. 25, down from a six-year high of 61 percent last March.

“It’s going to take a lot of cold weather to really get this market moving,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “We have cut into the five-year average a little bit, so that’s somewhat supportive for the market.”

Natural gas for February delivery rose 2.2 cents, or 0.7 percent, to $3.323 per million British thermal units at 10:12 a.m. on the New York Mercantile Exchange. Trading volume was 30 percent below the 100-day average for the time of day. The futures have gained 33 percent from a year ago.

The low in Minneapolis on Feb. 17 may be 3 degrees Fahrenheit (minus 16 Celsius), 11 below normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Chicago may be 21 degrees Fahrenheit, 1 below the usual reading.

About 50 percent of U.S. households use gas for heating, data from the Energy Information Administration show. The agency is part of the Energy Department.

Gas Stockpiles

Gas inventories totaled 2.802 trillion cubic feet in the week ended Jan. 25, 6.7 percent below last year’s stockpiles for the period. The supply surplus to the five-year norm has climbed from 11 percent over the past two weeks.

The EIA increased its estimate for 2013 natural gas prices, citing more normal winter heating demand compared with last year. Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.74 per million British thermal units, compared with the previous estimate of $3.68 and $2.75 in 2012, the EIA said Jan. 8 in its monthly Short-Term Energy Outlook.

Natural gas production in the lower-48 states rose to a record in November as more of the fuel was pumped from shale wells in the Northeast.

Output increased 0.6 percent to 73.88 billion cubic feet a day from a revised 73.47 billion in October, the Energy Department’s Energy Information Administration said in the monthly EIA-914 report released Jan. 31 in Washington.

Supplies from the “other states” category rose 1.4 percent to 24.29 billion cubic feet a day from a revised 23.96 billion in October. Production advanced as “some operators reported new wells coming online in the Marcellus shale play,” the EIA said in the report.

The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 84 percent of its energy needs in the first 10 months of last year, government data show. If the trend lasted through 2012, it will be the highest level of self-sufficiency since 1991.

To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net;

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

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