Natural gas futures jumped to a three-week high in New York as storms and cold weather boosted heating demand, cutting stockpiles to the lowest in 10 years.
Gas surged 6.5 percent as the second storm in three days brought snow to the Northeast. Government data Feb. 20 may show that inventories tumbled 249 billion cubic feet in the week ended Feb. 14, according to Donald Murry, an economist at C.H. Guernsey & Co. in Oklahoma City. The five-year average drop is 133 billion for the period. U.S. gas supplies are the lowest for this time of year since 2004.
“The market is showing some strength,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “We’re still in winter and as long as these triple-digit withdrawals continue, we’re going to see continued upside.”
Natural gas for March delivery rose 33.7 cents to $5.551 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 29. Trading volume was 19 percent above the 100-day average at 2:43 p.m. Gas futures are up 31 percent this year, the second-biggest gainer in the Standard & Poor’s GSCI index of 24 commodities, after coffee.
The Nymex floor was closed yesterday for the U.S. Presidents Day holiday. Electronic trading yesterday counted toward today’s settlement.
March gas traded 79.8 cents above the April contract, compared with 63.7 cents on Feb. 14 and 17.8 cents a month ago. Implied volatility for April at-the-money options was 42.91 percent at 3 p.m., compared with 30.89 percent for the front-month contract a year ago.
March $7 calls were the most active options in electronic trading. They were 1.3 cents lower at 4.6 cents per million Btu on volume of 2,670 at 3:06 p.m. Calls accounted for 74 percent of trading volume.
Today’s storm brought 1.5 inches (3.8 centimeters) of snow to New York’s Central Park, the National Weather Service said.
A winter storm warning was in effect for southern Maine, New Hampshire and areas north of Boston. The city may get 2-4 inches of snow from the weather system, which triggered the cancellation of 640 flights today.
Commodity Weather Group LLC in Bethesda, Maryland, forecast colder-than-normal weather in the Northeast and Midwest from Feb. 23 through March 4.
The low in Boston on Feb. 25 may be 18 degrees Fahrenheit (minus 8 Celsius), 9 less than usual, according to AccuWeather Inc. in State College, Pennsylvania. Cincinnati temperatures may also fall to 18 degrees Fahrenheit, 9 below average.
“Another snowstorm in the U.S. is likely to keep heating demand at a high level and spark a further decline in the already severely diminished stocks of heating oil and natural gas,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a note to clients today.
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.
Gas stockpiles totaled 1.686 trillion cubic feet in the week ended Feb. 7, reaching record deficits to the five-year average and year-ago supplies.
Stocks at the end of March, when the heating season draws to a close, will drop to 1.33 trillion cubic feet, the lowest level since 2008, the Energy Information Administration said Feb. 11 in its monthly Short-Term Energy Outlook. The EIA is the Energy Department’s statistical arm.