Natural Gas Rebounds From Two-Year Low Amid Cold Weather Outlook

Natural gas futures rebounded in New York, gaining for the first time in four days as colder weather forecasts for the end of the month signaled higher demand for the heating fuel.

A cold air mass is arriving in the Midwest and parts of the Northeast “a little more aggressively” from Dec. 28 to Jan. 1 than earlier forecasts showed, Anthony Chipriano, a meteorologist with MDA Weather Services, said by phone. Colder air may shift east to more populous areas after that, he said.

The low temperature in Chicago on Dec. 30 may be 15 degrees Fahrenheit (minus 9 Celsius), 4 less than normal.

“There is some cold ahead of us in the week ahead, and January is still something of a question mark,” said Tim Evans, an energy analyst at Citi Futures in New York. “We still have some potential to see significant net withdrawals from storage.”

Natural gas for January delivery rose 2.7 cents, or 0.9 percent, to settle at $3.171 per million British thermal units on the New York Mercantile Exchange. Yesterday’s close was the lowest since January 2013. Volume for all futures traded was 11 percent below the 100-day average at 3:02 p.m.

Gas inventories probably dropped by 62 billion cubic feet last week, compared with the five-year average withdrawal of 138 billion, according to the median of 9 analyst estimates compiled by Bloomberg. Last year’s withdrawal was 196 billion.

EIA Report

A storage report by the Energy Information Administration, an arm of the Energy Department, is scheduled for noon tomorrow in Washington, a day earlier than usual because of the Christmas holiday.

Gas stockpiles totaled 3.295 trillion cubic feet as of Dec. 12, up 47 billion from the year-earlier period. An estimated 49 percent of U.S. households use gas for heating, according to the EIA.

“The bottom fell out of the market on Friday, and we kept dropping on Monday, and now there is a little bargain-hunting,” Evans said. “We have taken a significant portion of the downside risk away from this market by dropping down to levels we haven’t seen since January 2013.”

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