Natural Gas Advances as Storms Boost East Coast Heating Demand

Natural gas futures rose to a six-month high in New York as storms brought snow and below-normal temperatures to the East Coast.

Gas gained as much as 1.3 percent as the National Weather Service issued weather advisories from New York City to Alabama, with a winter storm warning in place in southeast Pennsylvania and southern New Jersey. The low in New York today may be 24 degrees Fahrenheit (minus 4 Celsius), 10 less than usual, according to AccuWeather Inc., and temperatures may drop to 21 degrees tomorrow.

“The market continues to advance on the back of strong seasonal demand,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re seeing significant gains with the cold weather forecasts.”

Natural gas for January delivery rose 3.4 cents, or 0.8 percent, to $4.266 per million British thermal units at 9:57 a.m. on the New York Mercantile Exchange. Trading volume was almost double the 100-day average. Prices are up 27 percent this year. The futures advanced to $4.287 in earlier trading, the highest intraday price since May 28.

The premium of January to February futures widened 0.3 cent to 1 cent. March gas traded 9.5 cents above the April contract, compared with 7.8 cents yesterday.

February $4.50 calls were the most active options in electronic trading. They were 0.2 cent higher at 11.2 cent per million Btu on volume of 1,199 at 10:03 a.m. Calls accounted for 70 percent of trading volume.

Storm Outlook

Today’s storm will pass through most areas by late today and will probably leave from 3 to 5 inches of snow (6 to 13 centimeters) in the large Northeast cities, including New York, said Tom Kines, a meteorologist with AccuWeather in State College, Pennsylvania. Federal offices in Washington are closed today, according to a statement on the Office of Personnel Management’s website.

The low in Boston tomorrow may be 20 degrees Fahrenheit, 10 below average, AccuWeather data show. MDA Weather Services in Gaithersburg, Maryland, predicted colder-than-normal weather in most of the lower-48 states through Dec. 14.

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 3.4 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 LLC in Bethesda, Maryland, said in a Nov. 25 seasonal outlook.

Gas stockpiles were 2.8 percent below the five-year average and 5.2 percent less than last year’s supplies for the seven days ended Nov. 29, EIA data show. Last week’s inventory change was the biggest November decline in records going back to 1994.

Gross gas production in the lower-48 states slid 0.8 percent in September to 73.91 billion cubic feet a day from a revised 74.49 billion the previous month, the EIA said Dec. 6 in its monthly EIA-914 report. Output fell as a gas plant shut in Wyoming and producers in Louisiana reported maintenance and “normal well declines,” the agency said.

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