Natural Gas Futures Gain as Eastern Chill Spurs Heater Use

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Natural gas futures climbed for a second day in New York as unusually cold spring weather in the eastern and central U.S. may boost heating demand.

Temperatures will be below normal in the Northeast and Great Lakes region through May 1, according to MDA Weather Services. The low in Chicago on April 25 may be 38 degrees Fahrenheit (3 Celsius), 8 less than usual, AccuWeather Inc. said on its website.

“We have a cold front sweeping down from Canada that’s affecting the eastern part of the country to varying degrees,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “We’re seeing a moderate amount of additional demand.”

Natural gas for May delivery rose 3.1 cents to settle at $2.606 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 26 percent below the 100-day average at 2:38 p.m. Prices are down 9.8 percent this year.

The low in Boston on April 24 may be 41 degrees Fahrenheit, 2 below normal, AccuWeather said.

Gas deliveries to power plants climbed 13 percent from a year ago to 21.2 billion cubic feet a day as of 2:25 p.m. Wednesday, according to LCI Energy Insight in El Paso, Texas. Electricity generation accounts for 32 percent of gas demand in the U.S., Energy Information Administration data show.

Chemical Plants

Gas demand may advance 3.9 percent this year to average 76.34 billion cubic feet a day, driven by power plants and industrial users, the EIA said in an April 7 report. Industrial demand may gain 5 percent to 22 billion a day as new plants that manufacture fertilizer and chemicals start up.

Inventories totaled 1.539 trillion cubic feet in the week ended April 10, 8.6 percent below the five-year average, the EIA said April 16.

Government data scheduled for release Thursday may show that gas stockpiles rose by 86 billion cubic feet last week, compared with the five-year average gain of 46 billion for the period, according to the median of 11 analyst estimates compiled by Bloomberg.

Natural gas may reach $3 per million Btu during the second half of 2015 as production growth slows and demand rises, Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said in a note to clients today.

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