Natural Gas Futures Fluctuate on Outlook for Moderating Weather

Natural gas futures fluctuated in New York as forecasts showed milder weather that would reduce demand for the heating fuel.

Gas moved between gains and losses as WSI Corp. in Andover, Massachusetts, said temperatures would be normal or above normal in the eastern half of the U.S. from Dec. 2 through Dec. 6. The low in New York on Dec. 3 may be 38 degrees Fahrenheit (3 Celsius), 2 more than usual, according to AccuWeather Inc. in State College, Pennsylvania.

“It looks like we’re going to be putting the cold weather behind us next week,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “That’s going to put the kibosh on the recent rally unless we see a change in the forecast.”

Natural gas for January delivery rose 0.7 cent to $3.871 per million British thermal units at 10:06 a.m. on the New York Mercantile Exchange. Trading volume was 49 percent below the 100-day average. Prices are up 2.7 percent from a year ago. Gas climbed to $3.875 per million Btu in earlier trading, the highest intraday price since June 21.

The discount of January to February futures was unchanged at 0.6 cent. March gas traded 3.1 cents above the April contract, compared with 2.9 cents yesterday.

January $3.90 calls were the most active options in electronic trading. They were 0.1 cent lower at 12 cents per million Btu on volume of 173 at 10:11 a.m. Calls accounted for 58 percent of trading volume.

Above Normal

The low in St. Louis on Dec. 3 may be 37 degrees, 8 more 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.

An EIA report scheduled for release at noon in Washington may show inventories slid by 13 billion cubic feet in the week ended Nov. 22, according to the median of 22 analyst estimates compiled by Bloomberg. Stockpiles fell by 2 billion in the same week last year while the five-year average inventory withdrawal for the week is 15 billion, EIA data show.

Supplies totaled 3.789 trillion cubic feet in the seven days ended Nov. 15, 0.4 percent above the five-year average and 2.3 percent below the year-ago total.

Marketed gas output in the U.S. may climb 1.5 percent this year to a record 70.29 billion cubic feet a day, the EIA said Nov. 13 in its monthly Short-Term Energy Outlook.

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 Nov. 12 in its monthly Drilling Productivity Report.

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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