Winter’s not quite over for U.S. natural gas bulls.
Gas futures climbed to a one-month high Tuesday as forecasts showed cooler weather that would boost demand for the fuel in the eastern U.S. next week. Prices have climbed for seven of the past eight days, rebounding after the worst February rout since 2006.
Bullish traders are betting on a recovery after a mild winter and a widening inventory glut pushed futures to 1990s-era lows. Without an usually hot summer or a steep decline in gas output from shale formations, supplies will test storage capacity in the fall.
“The weather forecasts have been revised a little cooler, and we’re going to see heating demand in some areas of the country,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We still have a very oversupplied market, though, so there’s going to be a limit to how much we can push higher.”
Natural gas for April delivery rose 3.2 cents, or 1.8 percent, to settle at $1.851 per million British thermal units on the New York Mercantile Exchange, the highest close since Feb. 18. Prices are down 21 percent this year.
“We may be seeing increased odds of below-normal temperatures in the eastern U.S. for the first time in quite a while,” said Todd Crawford, a meteorologist at the Weather Company in Andover, Massachusetts.