Natural Gas Futures Gain for Sixth Day on Cold Weather View

Natural gas futures climbed for a sixth day in New York, capping the longest bullish streak in more than a year, as meteorologists predicted colder-than-normal weather that would stoke heating-fuel demand.

Gas gained 1.2 percent as MDA Weather Services in Gaithersburg, Maryland, forecast below normal temperatures in the eastern half of the U.S. through Nov. 16, followed by cooler-than-average readings in the Midwest through Nov. 21. The low in Chicago on Nov. 19 may be 18 degrees Fahrenheit (minus 8 Celsius), 15 below normal, according to AccuWeather Inc.

“Temperatures are starting to drop across the Midwest and East,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The forecast for the second part of November has shifted a little bit colder and the market is trying to keep the rally going.”

Natural gas for December delivery rose 4.3 cents to $3.617 per million British thermal units on the New York Mercantile Exchange, capping the longest string of gains since the six days ended Oct. 2, 2012. The settlement price was the highest since Oct. 30. Trading volume was 3.1 percent above the 100-day average at 2:39 p.m. Prices have climbed 7.9 percent this year.

The discount of December to January futures was unchanged at 4.9 cents. March gas traded 1.1 cents above the April contract, unchanged from yesterday.

December $3.95 calls were the most active options in electronic trading. They were 0.1 cent higher at 0.9 cent per million Btu on volume of 607 at 2:39 p.m. Calls accounted for 53 percent of trading volume.

Below Normal

The low in Minneapolis on Nov. 19 may be 11 degrees Fahrenheit, 13 less than usual, AccuWeather data show. About 49 percent of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical arm.

The U.S. may have 1.3 percent more heating-degree days, a measure of weather-driven energy demand, from November to March compared with the same period last year, Commodity Weather Group LLC in Bethesda, Maryland, said today in an updated seasonal outlook.

“There is snow in a lot of places this morning, as a Canadian arctic blast heads south and east from the Great White North,” Mike Fitzpatrick, editor of The Energy OverView newsletter in New York, wrote today. “Temperatures are expected to moderate almost as quickly as they became harsh, but that is not the focus of value investors, who are determined not to miss out.”

Inventory Report

The EIA’s weekly natural gas stockpile report, due Nov. 14 in Washington, may show inventories rose by 25 billion cubic feet in the seven days ended Nov. 8, according to the median of three analyst estimates compiled by Bloomberg. The five-year average increase for the period is 19 billion. Supplies fell by 12 billion in the same week last year.

Gas inventories totaled 3.814 trillion cubic feet in the week ended Nov. 1, EIA data show. Supplies were 1.5 percent above the five-year average and 2.9 percent below year-earlier stockpiles.

Natural gas production from the Marcellus shale formation in the U.S. Northeast may increase 3.3 percent in December to 12.9 billion cubic feet a day from an estimated 12.5 billion in November, the EIA said today in its monthly Drilling Productivity Report.

The number of rigs drilling for natural gas in the U.S. climbed by five last week to 365, Baker Hughes Inc. in Houston said Nov. 8. The total is down 15 percent this year.

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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