Natural gas futures climbed in New York for the first time in seven days before a government report tomorrow that may show this winter’s biggest stockpile drop.
Gas gained 2.4 percent as analysts expect the report to show that stockpiles tumbled 205 billion cubic feet in the week ended Jan. 25, based on a median of 16 estimates compiled by Bloomberg. A drop that size would be the biggest since February 2011. The five-year average decline for the week is 178 billion, according to government data.
“The report is going to reflect the coldest temperatures in recent memory,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “There could be some short covering ahead of what may be the biggest drawdown all year. This is going to be the granddaddy of them all, unless the weather patterns change significantly colder.”
Natural gas for March delivery rose 7.7 cents to settle at $3.335 per million British thermal units on the New York Mercantile Exchange. Trading was down 32 percent from the 100-day average for the time of day.
The February contract, which expired yesterday, fell to $3.226, the lowest settlement price since Jan. 10. The futures have slipped 0.5 percent in January, heading for a third straight monthly decline.
March $3 puts were the most active gas options in electronic trading. They were 1.3 cents lower at 1.9 cents per million Btu on volume of 1,159 contracts as of 2:43 p.m. Calls accounted for 50 percent of options volume.
Gas inventories totaled 2.996 trillion cubic feet in the week ended Jan. 18, 5 percent below last year’s stockpiles for the period and 12 percent above the five-year average, data from the Energy Information Administration show. The agency is part of the Energy Department.
The weather may be colder than normal in the upper Midwest through Feb. 3, a forecast from MDA Weather Services in Gaithersburg, Maryland, showed.
The low in Chicago on Feb. 1 may be 9 degrees Fahrenheit (minus 13 Celsius), 10 less than usual, according to AccuWeather Inc. in State College, Pennsylvania. The low in Minneapolis may be 0 degrees, 9 lower than average. About 50 percent of U.S. households use gas for heating.
The EIA increased its estimate for 2013 natural gas prices, citing more normal winter heating demand compared with last year. Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $3.74 per million British thermal units, compared with the previous estimate of $3.68 and $2.75 in 2012, according to the monthly Short-Term Energy Outlook.
Natural gas output in the lower-48 states rose to an all-time high in October as more of the fuel was pumped from shale formations in the Northeast and North Dakota, the EIA said in a Jan. 7 report.
Gross gas production increased 0.4 percent to 73.54 billion cubic feet a day from a revised 73.22 billion in September, the agency said in the monthly EIA-914 report.
Supplies from the “other states” category rose 1.8 percent to 23.94 billion cubic feet a day from a revised 23.51 billion in September. Production in that region advanced “as operators reported new wells coming online in the Marcellus and Bakken shale plays,” the EIA said.
The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 84 percent of its energy needs in the first 10 months of last year, government data show. If the trend continued through 2012, it would be the highest level of self-sufficiency since 1991.