Natural Gas Gains in Survey as Colder Weather to Boost Demand

Natural gas futures may advance next week as forecasts for cooler U.S. weather signaled increased demand for the power-plant and heating fuel.

Seven of 10 analysts, or 70 percent, predicted that futures will gain on the New York Mercantile Exchange through Oct. 18. Two, or 20 percent, said gas will fall and one predicted prices will stay the same. Last week, 64 percent of participants said gas would decline.

Below-normal temperatures in the central states next week will sweep into the Northeast from Oct. 20 through Oct. 24, according to MDA Weather Services in Gaithersburg, Maryland. Energy Information Administration data yesterday showed an above-average stockpile increase for the third straight week. The U.S. government shutdown may delay future supply reports.

“We suspect that the soon-to-be absence of the weekly EIA supply data will likely keep prices supported over the next week as investors focus ahead on winter heating demand,” Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York, said in an e-mail yesterday. “No data is good data for gas buyers.”

Natural gas futures jumped 21.7 cents, or 6.2 percent, to $3.723 per million British thermal units during the first four days of this week on the Nymex, rising to the highest settlement price since Sept. 17. The futures are up 11 percent this year.

Cold Weather

The cold weather will be centered in the Great Plains next week and drive down to Texas, MDA said. The low in Minneapolis on Oct. 18 may drop to 33 degrees Fahrenheit (1 Celsius), 6 below normal, from the 50s this week, according to AccuWeather Inc. in State College, Pennsylvania.

Almost half of U.S. households rely on gas for heating while 39 percent use electricity, data show from the EIA, the statistical arm of the Energy Department. The heating season from November through March is the peak period for gas consumption.

Supplies rose 90 billion cubic feet in the week ended Oct. 4 to 3.577 trillion cubic feet, above the five-year average gain of 84 billion for the seven days, according to the EIA. Analyst estimates compiled by Bloomberg predicted a gain of 92 billion.

The gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

7 2 1

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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