Natural gas futures gained for a second day in New York on speculation that an unusually cold end to March will erode stockpiles already at an 11-year low.
Gas rose 2.5 percent as Commodity Weather Group LLC predicted below-normal temperatures for the Midwest and East from March 22 through March 31. Fuel demand caused by waves of arctic air pushed gas inventories during the first week of March to the lowest seasonal level since 2003, government data show.
“The bounce is a function of the relative return of some weather,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “That threatens some pretty good withdrawals. You will continue to get draws if we get these winter temperatures as opposed to spring-like temperatures.”
Natural gas for April delivery rose 11.1 cents to settle at $4.536 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 40 percent below the 100-day average at 2:36 p.m. The futures are up 7.2 percent this year.
Investors added a net $59.35 million on March 14 to U.S.- listed exchange-traded funds that invest in energy, equivalent to 1.6 percent of total assets, data compiled by Bloomberg show. They added $70.76 million, or 10 percent, to the U.S. Natural Gas Fund, the biggest gas ETF.
Weather models today show a “stronger cold outbreak this coming weekend and continuing deep into next week for the Midwest, East and South,” Matt Rogers, president of Commodity Weather in Bethesda, Maryland, said in a note to clients today.
Unusually low readings lingering across the regions through the end of the month mean this will be the coldest March since 1996, said Rogers, whose estimate factors in gas-weighted heating-degree days based on population.
The high temperature in Chicago on March 27 will be 36 degrees Fahrenheit (2 Celsius), 15 below normal, while New York City’s reading will be 13 lower than average at 41 degrees, according to AccuWeather Inc. in State College, Pennsylvania.
“The colder changes ahead next week amount to a gain of roughly 25-36 cumulative heating-degree days from last Friday’s forecasts and significantly boost the outlook for heating demand,” Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York, said in a note to clients today.
About 49 percent of U.S. households use gas for heating, with the biggest share in the Midwest, data show from the U.S. Energy Information Administration, the statistical arm of the Energy Department.
Stockpiles of the heating and power-plant fuel dropped to 1.001 trillion cubic feet in the week ended March 7, the least for the time of year since 2003, an EIA report last week showed. Supply deficits widened to a record 46.2 percent versus the five-year average and 48.9 percent versus year-earlier levels.
Hedge funds increased bullish bets on natural gas for the fourth time in five weeks, U.S. Commodity Futures Trading Commission data show.
Net-long positions on four U.S. natural gas contracts rose 7,144 futures equivalents, or 1.7 percent, to 418,828 in the week ended March 11, a commission report released March 14 showed. Bearish bets fell 2.9 percent for the first decline in three weeks.