Natural Gas May Climb as Cold Weather Spurs Demand

Natural gas futures may advance next week as below-normal eastern U.S. temperatures spur demand for the heating fuel, a Bloomberg survey showed.

Six of 11 analysts, or 55 percent, forecast that gas futures will rise on the New York Mercantile Exchange through March 8. Four, or 36 percent, said futures will fall and one predicted that prices will stay the same. Last week, 58 percent of participants said gas prices would decline.

Below-normal temperatures in the eastern half of the U.S. next week will shift to the central states over the next 11 to 15 days, according to MDA Weather Services. The Gaithersburg, Maryland-based forecaster said while the outlook has moderated there is still a cold pattern in the middle of the continent.

“We are going to see some areas that are going to be very cold,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “My feeling is demand is still going to be strong even with the lower weather forecast. The market is acting like it wants to hold up.”

Natural gas futures jumped 16.5 cents, or 5 percent, to $3.456 per million British thermal units this week in New York. The futures capped the biggest weekly gain since the five days ended Jan. 18.

Gas futures pushed higher even as weather forecasts moderated this week, creating a “pretty good technical bottom” to advance further next week, Flynn said.

Below Normal

The low temperature in Chicago on March 13 will be 19 degrees Fahrenheit (minus 7 Celsius), 11 below normal, and Dallas may be 5 lower than the usual reading at 42 degrees, according to AccuWeather Inc. in State College, Pennsylvania.

About 50 percent of U.S. households use gas for heating, according to data from the Energy Information Administration, the Energy Department’s statistical division.

Gas stockpiles fell by 171 billion cubic feet to 2.229 trillion in the week ended Feb. 22, above the five-year average drop of 118 billion for the period, an EIA report yesterday showed. Analyst estimates compiled by Bloomberg showed a decline of 170 billion.

A supply surplus to the five-year average for last week narrowed to 16 percent from 17.7 percent the previous week. A deficit versus year-earlier levels widened to 12.1 percent from 9.2 percent.

The gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:


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