Natural Gas Futures Advance on Forecasts for Eastern U.S. Chill

Nov. 7 (Bloomberg) -- Natural gas futures gained for a third day in New York on forecasts for colder-than-normal weather that would stoke demand for the heating fuel.

Gas climbed as much as 3.5 percent as MDA Weather Services in Gaithersburg, Maryland, said temperatures may be below-average in the eastern half of the U.S. through Nov. 16. The low in New York on Nov. 14 may be 32 degrees Fahrenheit (0 Celsius), 10 less than usual, according to AccuWeather Inc. in State College, Pennsylvania.

“It seems like there’s going to be more heating demand coming down the line,” said Victor Zevallos, an energy trader at FCStone Latin America LLC in Miami. “The forecasts are looking pretty cold for the next couple of weeks.”

Natural gas for December delivery rose 9.8 cents, or 2.8 percent, to $3.596 per million British thermal units at 9:20 a.m. on the New York Mercantile Exchange. Trading volume was more than double the average for the time of day. Prices have climbed 7.3 percent this year.

The discount of December to January futures narrowed 1.3 cents to 5.5 cents. March gas traded 2 cents above the April contract, compared with 1.1 cents yesterday.

December $3.70 calls were the most active options in electronic trading. They were 2.7 cents higher at 6.2 cents per million Btu on volume of 324 at 9:30 a.m. Calls accounted for 74 percent of trading volume.

The low in Chicago on Nov. 14 may be 23 degrees Fahrenheit, 12 less 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.

Colder Winter

The U.S. may have 1.3 percent more heating-degree days, a measure of weather-driven energy demand, from November to March compared with the same period last year, Commodity Weather Group LLC said in a Sept. 23 seasonal outlook.

An EIA report scheduled for release at 10:30 a.m. today in Washington may show gas stockpiles rose by 36 billion cubic feet in the week ended Nov. 1, according to the median of 18 analyst estimates compiled by Bloomberg. The five-year average gain is also 36 billion for the period. Supplies climbed by 27 billion a year earlier.

Gas inventories totaled 3.779 trillion cubic feet in the week ended Oct. 25, EIA data show. Supplies were 1.6 percent above the five-year average and 3.1 percent below year-earlier stockpiles.

The number of rigs drilling for natural gas in the U.S. slid by 16 to 360 last week, data released Nov. 1 by Baker Hughes Inc. in Houston showed. The total is down 16 percent this year.

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