Natural gas futures headed for the biggest one-day gain in New York since Jan. 29 on speculation that unseasonably cold weather will trim a fuel stockpile glut.
Most of the eastern U.S. will see below-normal temperatures April 9 through April 13, according to MDA Weather Services. The high in Chicago on April 12 may be 55 degrees Fahrenheit (13 Celsius), 3 lower than average, according to AccuWeather Inc.
“A little winter weather is going a long way,” John Kilduff, a partner at Again Capital LLC in New York, said in a phone call. “It looks like this cold snap is a little more intense and a little longer-lasting than initially thought.”
Natural gas futures for May delivery jumped 9.8 cents, or 5 percent, to $2.054 per million British thermal units at 10:17 a.m. on the New York Mercantile Exchange after rising as high as 6 percent. Prices are down 13 percent for the year.
Natural gas producers are using a rally in prices to hedge more output, Morgan Stanley analysts said in a research note Monday. Gas for delivery in August 2017 on the Nymex has risen 12 percent since the end of February, while producer and merchant bets on falling prices -- a common hedging strategy -- rose to the highest level since December.
Gas deliveries to power plants climbed 7.4 percent from a year ago to 21 billion cubic feet a day as of 10:09 a.m. Monday, according to PointLogic Energy in El Paso, Texas.
“We got a little bit of unseasonably cold weather,” Thomas Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami, said by phone.