Natural Gas Futures Gain on Forecasts for Frigid March Weather

Natural gas futures rose in New York for the first time this week on forecasts for below-normal March temperatures that would cut stockpiles of the heating fuel.

Gas gained 2.2 percent as MDA Weather Services in Gaithersburg, Maryland, predicted colder-than-normal weather in the eastern half of the U.S. through March 13. Inventories totaled 1.348 trillion cubic feet in the week ended Feb. 21, the lowest for the time of year since 2004, government data show.

“We still have weather support and we still have storage support,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “Those are two issues that are not going to disappear anytime soon.”

Natural gas for April delivery rose 9.8 cents to settle at $4.609 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 26 percent below the 100-day average at 2:37 p.m. The futures tumbled 25 percent this week, capping the biggest one-week drop since 1996 and the first monthly decline since September.

Related:

April gas traded 5.9 cents above the May contract, compared with 3.7 cents yesterday.

April $5.50 calls were the most active options in electronic trading. They were 0.5 cent higher at 2.8 cents per million Btu on volume of 2,386 contracts at 2:48 p.m. Calls accounted for 62 percent of trading volume.

New York

The low in New York on March 4 may be 14 degrees Fahrenheit (minus 10 Celsius), 18 less than usual, according to AccuWeather Inc. Chicago’s temperatures may fall to 15, 12 below average.

January was the coldest start to a year since 2011, the National Oceanic and Atmospheric Administration said. About 49 percent of U.S. households use gas for heating, with the biggest share in the Midwest, according to the Energy Information Administration, the Energy Department’s statistical arm.

“Weather is the great bull friend right now,” Drew Wozniak, vice president of market research and development at ICAP Energy LLC in Louisville, Kentucky, said in a note to clients today.

Gas stockpiles were at a record deficit of 34.5 percent to the five-year average in the week ended Feb. 21, EIA data show. Supplies were 40.2 percent below year-earlier levels.

Inventories may drop to 929 billion cubic feet by the end of the winter, Jan Stuart, an analyst at Credit Suisse Group AG in New York, said in a note to clients yesterday. The total would be the lowest in EIA data since 2003.

Monthly Report

Gas production in the lower-48 states slipped 1.5 percent to 74.8 billion cubic feet a day in December from a revised 75.97 billion in November, the EIA said today in its monthly EIA-914 report. Output in Texas, Oklahoma and New Mexico declined as freezing weather caused shut-ins.

ConocoPhillips (COP), the owner and operator of Alaska’s Kenai liquefied natural gas plant, won approval from the Energy Department to resume exporting the fuel to nations with free trade agreements with the U.S.

The request to export to FTA countries was granted Feb. 19. The company’s application to export LNG to countries that do not have such agreements with the U.S. “is still pending,” Davy Kong, a Houston-based spokesman for the company, said by e-mail. The non-FTA application will close for comments today, according to the department’s website.

The company applied on Dec. 11 to restart Kenai at the request of the state of Alaska, which is looking to Asia, and especially Japan, as a major market for its natural gas reserves.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.