Natural Gas Futures Advance as East Coast Braces for Snow Storm

Natural gas advanced for the first time in three days in New York as the East Coast braced for its first significant snow of the season.

A powerful storm may drop as much as 8 inches (20 centimeters) of snow from Virginia to New York tomorrow and a foot in New England, the Weather Prediction Center said. The government’s midday Global Forecast System showed cooler central U.S. weather next week than earlier computer models, according to Commodity Weather Group LLC.

“The strong surge of below-normal temperatures for the balance of the week appears to have motivated buyers,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “The graphic depiction for the 6- to 10-day shows less widespread warmth in the center of the country.”

Natural gas for December delivery jumped 13.1 cents, or 3.2 percent, to settle at $4.282 per million British thermal units on the New York Mercantile Exchange after dropping 1.3 percent. Volume for all futures was 8.8 percent below the 100-day average at 2:49 p.m. Prices have risen 1.2 percent this year.

December futures expired today. The more actively traded January contract rose 9.9 cents, or 2.3 percent, to $4.403.

January $4.50 calls were the most actively traded options, gaining 3.7 cents to 27.2 cents on volume of 678 as of 2:41 p.m.

Winter storm warnings and watches stretched from North Carolina to Maine, including New York, Philadelphia and Boston, the National Weather Service said. The storm was forecast to reach Washington and Philadelphia early tomorrow and spread northward into New York and New Jersey during the course of the day, said Jim Hayes, a meteorologist with the Weather Prediction Center in College, Park, Maryland.

Below Normal

Manhattan’s low temperature on Nov. 27 will drop to 28 degrees Fahrenheit (minus 2 Celsius), 10 below normal, according to AccuWeather Inc. in State College, Pennsylvania. About 49 percent of U.S. households use gas for heating, led by the Midwest.

The government’s midday Global Forecast System showed that a warm-up that will push temperatures above seasonal averages next week across the lower 48 states will be less intense than previous computer models indicated, Matt Rogers, president of Commodity Weather in Bethesda, Maryland, said in an e-mail.

The gas market “is holding out hope” that weather patterns pushing cold air across the East this week will result in even colder revisions for next week, said Viswanath.

Record Decline

An arctic blast in the week ended Nov. 21 may have contributed to a record stockpile withdrawal for the period of 150 billion cubic feet, based on the median of 16 analyst estimates compiled by Bloomberg. The U.S. Energy Information Administration is scheduled to release its weekly supply report tomorrow, a day earlier than usual because of the U.S. Thanksgiving holiday the following day.

Estimates ranged from declines of 131 billion to 162 billion cubic feet. The current record decline for the period is 148 billion in the week ended Nov. 24, 2000, according to EIA data. The five-year average drop is 6 billion.

“That will be a top-three record withdrawal for the month of November and that should provide temporary support to the market,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. He expects tomorrow’s EIA report to show a decline of 150 billion cubic feet, with the following two releases showing drops of around 35 billion.

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