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Natural Gas Gains as Colder U.S. Weather Spurs Heating Demand

Natural gas futures rose the most in almost three weeks in New York on speculation that colder weather across the U.S. in early March will spur fuel use.

Gas gained for the first time in three days as Commodity Weather Group LLC in Bethesda, Maryland, predicted below-normal temperatures for most of the lower 48 states from March 1 through March 5 after milder weather in the East next week. A gas surplus to the five-year average has widened since the end of November as mild weather crimped demand for the heating fuel.

“The weather is proving to be fairly cold so that’s showing a lot of demand,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “I wouldn’t look for any large rallies here because there’s plenty of inventory left in storage.”

Natural gas for March delivery increased 8.3 cents, or 2.6 percent, to $3.236 per million British thermal units at 9:50 a.m. on the New York Mercantile Exchange. If prices settle there it would be the biggest one-day gain since Jan. 30. Trading volume was 43 percent above the 100-day average for the time of day. Prices are down 3.4 percent this year.

March $3.30 calls were the most active gas options in electronic trading. They were up 1.2 cents to 2.8 cents per million Btu on volume of 713 contracts as of 9:53 a.m. Calls accounted for 66 percent of options volume.

Pacific Storm

A storm moving off the Pacific Ocean will probably bring heavy snow to the mountains around San Diego and Los Angeles before blanketing the Upper Midwest and Great Plains later this week, according to the National Weather Service.

Six to 12 inches (15 to 30 centimeters) of snow are possible in the mountains just north and east of Los Angeles. After the storm crosses the Rocky Mountains, it may drop as much as a foot of snow on the drought-parched Upper Midwest and central Great Plains.

About 50 percent of U.S. households use gas for heating, according to the Energy Information Administration.

Gas inventories totaled 2.527 trillion cubic feet during the week ended Feb. 8, the EIA, the statistical arm of the Energy Department, said in report last week. A supply surplus to the five-year average has widened to 16 percent from 4.6 percent on Nov. 30.

A stockpile deficit to year-earlier levels increased to 9.7 percent from a surplus of 0.7 percent at the end December, EIA data show. Last winter was the fourth-warmest on record for the contiguous 48 states, reducing fuel demand from power plants and households.

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net;

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

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