Natural Gas Futures Advance on Outlook for Eastern U.S. Cold

Natural gas futures climbed for a fifth day in New York, the longest bullish streak since March, amid forecasts for below-normal temperatures that would boost heating demand.

Gas gained 0.4 percent after forecasters including Commodity Weather Group LLC in Bethesda, Maryland, said colder-than-normal weather will blanket the eastern half of the U.S. through Nov. 15. The low in New York on Nov. 13 may be 34 degrees Fahrenheit (1 Celsius), 9 below average, according to AccuWeather Inc. in State College, Pennsylvania.

“We’re supposed to get some winter-like temperatures this week and the forecasts are giving the market a little bit of support,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “The market is respecting the fact that we have the whole winter ahead of us.”

Natural gas for December delivery rose 1.5 cents to $3.574 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Oct. 31. Trading volume was 20 percent below the 100-day average. Prices have climbed 6.1 percent this year.

The discount of December to January futures narrowed 0.8 cent to 4.9 cents. March gas traded 1.1 cents above the April contract, compared with 1.5 cents on Nov. 8.

December $3.55 puts were the most active options in electronic trading. They were 1.5 cents lower at 8 cents per million Btu on volume of 716 at 2:39 p.m. Puts accounted for 51 percent of trading volume.

Net-Long Bets

Net-long wagers on four U.S. natural gas contracts fell 67,396, or 36 percent, to 119,621 futures equivalents in the week ended Nov. 5, the lowest since January, according to Commodity Futures Trading Commission data released Nov. 8.

The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.

The low temperature in Chicago on Nov. 13 may be 31 degrees, 5 less than usual, AccuWeather data show. About 49 percent of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical arm.

The U.S. may have 1.3 percent more heating-degree days, a measure of weather-driven energy demand, from November to March compared with the same period last year, Commodity Weather Group said in on Oct. 15 seasonal outlook.

Gas inventories totaled 3.814 trillion cubic feet in the week ended Nov. 1, EIA data show. Supplies were 1.5 percent above the five-year average and 2.9 percent below year-earlier stockpiles.

The number of rigs drilling for natural gas in the U.S. climbed by five last week to 365, data released Nov. 8 by Baker Hughes Inc. in Houston showed. The total is down 15 percent this year.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE