Natural Gas Advances as Winter Storms Pound Texas to Tennessee

Natural gas futures climbed to a six-month high in New York as wintry weather stoked demand for the heating fuel.

Gas gained 2.9 percent. An icy storm fueled by the coldest air of the season is blanketing the U.S. from coast to coast. New York City may get snow late tomorrow before it changes over to sleet, while West Virginia, the western part of Virginia and Maryland’s panhandle may see a half-inch (1.3 centimeters) of ice tomorrow, according to the National Weather Service and AccuWeather Inc.

“All of this cold and snow is helping to push the gas market higher,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “We’ve seen a pretty good rally over the past couple of weeks and the momentum is still there.”

Natural gas for January delivery rose 11.8 cents to $4.232 per million British thermal units on the New York Mercantile Exchange, the highest settlement since May 24. Trading volume was 58 percent above the average at 2:53 p.m. Prices are up 26 percent this year.

The premium of January to February futures widened 0.3 cent to 0.7 cent. March gas traded 7.8 cents above the April contract versus 6 cents in the previous session.

March $6 calls were the most active options in electronic trading. They were 0.5 cent higher at 1.1 cents per million Btu on volume of 3,422 at 2:53 p.m. Calls accounted for 68 percent of trading volume.

Expected Snow

Tomorrow’s storm is expected to drop 3 to 6 inches of snow across northern New York and New England and as much as 3 inches in Washington, according to the National Weather Service.

MDA Weather Services in Gaithersburg, Maryland, predicted colder-than-normal weather across most of the contiguous U.S. through Dec. 13.

The low in New York on Dec. 12 may be 18 degrees Fahrenheit (minus 8 Celsius), 15 below average, according to AccuWeather Inc. in State College, Pennsylvania. Temperatures in Chicago may fall to 17 degrees versus the usual 24.

About 49 percent of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical unit.

The U.S. may have 3.4 percent more heating-degree days, a measure of weather-driven energy demand, from November to March versus the same period last year, Commodity Weather Group said in a Nov. 25 seasonal outlook.

Low Temperatures

“Many market participants continue to focus on the very cold temperatures that hit major portions of the U.S. as well as the massive storm that rambled across the country,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, said in a note to clients today. 

Gas stockpiles were 2.8 percent below the five-year average and 5.2 percent less than a year earlier on Nov. 29, EIA data show. Last week’s inventory change was the biggest November decline in records going back to 1994.

Gross gas production in the lower-48 states slid 0.8 percent in September to 73.91 billion cubic feet a day from a revised 74.49 billion the previous month, the EIA said Dec. 6 in its monthly EIA-914 report. Output fell as a gas plant shut in Wyoming and producers in Louisiana reported maintenance and “normal well declines,” the agency said.

Supply from the Marcellus shale formation in the Northeast may climb 418 million cubic feet a day, or 3.1 percent, to 13.7 billion a day in January from a month earlier, the EIA said today in its 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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