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Natural Gas Climbs in Survey as Arctic Chill Drives Demand

Natural gas futures will gain next week as freezing weather boosts demand and erodes inventories of the heating fuel, according to a Bloomberg survey.

Seven of 13 analysts, or 54 percent, said prices will advance on the New York Mercantile Exchange through Jan. 31. Six, or 46 percent, said gas will decline. Last week, 42 percent of participants said futures would gain.

Unusually low temperatures in the East this week will give way to an even stronger surge of cold from Midwest to the East Coast next week, said MDA Weather Services in Gaithersburg, Maryland. Withdrawals of gas from inventories, which were below-normal last week, will “much bigger” because of frigid weather in late January, Tim Evans, an energy analyst at Citi Futures in New York, said in a note to clients yesterday.

“Winter isn’t going away anytime soon,” said Santiago Diaz, associate of energy trading at FCStone Latin America LLC in Miami. “We think we might see some significant withdrawals for this week. Prices could go a little higher.”

Natural gas for February delivery surged 85.6 cents, or 20 percent, to $5.182 per million British thermal units this week on the Nymex. Today’s settlement was the highest since June 15, 2010, while the futures had their largest weekly percentage increase since Oct. 29, 2010. Gas is up 22 percent this month, the biggest gainer in the Standard & Poor’s GSCI index of 24 commodities.

Frigid Weather

The low temperature in Minneapolis on Jan. 27 will be minus 20 degrees Fahrenheit (minus 29 Celsius), 28 below normal, according to AccuWeather Inc. in State College, Pennsylvania. New York City’s low that day will be 12 degrees and the reading in Dallas will drop to 23 degrees, 15 lower than average for both cities.

About 49 percent of U.S. households use gas for heating, U.S. Energy Information Administration data show.

U.S. inventories fell by 107 billion cubic feet to 2.423 trillion in the week ended Jan. 10, below the five-year average drop of 181 billion, EIA data show. Analyst estimates compiled by Bloomberg predicted a decline of 103 billion.

A supply deficit versus the five-year average narrowed to 13.2 percent from a record 14.9 percent in the previous report.

The gas survey has correctly forecast the direction of prices 51 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 6 0

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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