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Natural Gas Futures Jump to One-Month High on Stockpile Outlook

Nov. 21 (Bloomberg) -- Natural gas futures advanced in New York to the highest price in almost a month on speculation that government data will show a larger-than-normal decrease in inventories of the heating fuel.

Gas gained as much 1 percent. An Energy Information Administration report scheduled for release at 10:30 a.m. in Washington may show a stockpile drop of 38 billion cubic feet last week, according to the median of 25 analyst estimates compiled by Bloomberg. The five-year average drop for the period is 2 billion.

“The market is gearing up for the first storage withdrawal of the season, and we have cold temperatures on top of that,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “There’s going to be increasing demand for natural gas down the road.”

Natural gas for December delivery rose 2.8 cents, or 0.8 percent, to $3.702 per million British thermal units at 10:04 a.m. on the New York Mercantile Exchange after advancing to $3.712, the highest intraday price since Oct. 25. Trading volume was 12 percent below the 100-day average. Prices have climbed 10 percent this year.

The discount of December to January futures narrowed 0.3 cent to 3.6 cents. March gas traded 1.5 cents above the April contract, compared with 1.6 cents yesterday.

December $3.75 calls were the most active options in electronic trading. They were 0.5 cent higher at 3.6 cents per million Btu on volume of 199 at 10:13 a.m. Calls accounted for 63 percent of trading volume.

Stockpile Report

Gas inventories totaled 3.834 trillion cubic feet in the week ended Nov. 8, EIA data show. Supplies were 1.5 percent above the five-year average and 2 percent below year-earlier stockpiles.

MDA Weather Services in Gaithersburg, Maryland, predicted colder-than-normal weather in the eastern two-thirds of the U.S. through Dec. 5.

The low in New York on Nov. 27 may be 23 degrees Fahrenheit (minus 5 Celsius), 15 less than average, according to AccuWeather Inc. in State College, Pennsylvania. The low in Chicago may be 26 degrees, 3 lower than normal.

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

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 in Bethesda, Maryland, said in an Oct. 15 seasonal outlook.

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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