Natural Gas Futures Climb as Cold Weather Boosts Heater Use

Natural gas advanced for a second day in New York as forecasts for an arctic chill in the eastern half of the U.S. signaled rising demand for the heating fuel.

The weather may be colder than normal in the Northeast and Midwest from Feb. 24 through March 5, according to WSI Corp. in Andover, Massachusetts. The low in Minneapolis on Feb. 25 may be minus 2 Fahrenheit (minus 19 Celsius), AccuWeather Inc. said on its website.

“We’re going to have at least another 10 days of cold and some pretty strong demand levels,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re likely to see some very large storage withdrawals in the coming weeks.”

Natural gas for March delivery rose 0.3 cent to $2.834 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 28. Volume for all futures traded was 44 percent above the 100-day average at 2:40 p.m. Prices are down 54 percent from a year ago.

New York temperatures may slide to 11 degrees Fahrenheit on Feb. 26, 20 below normal, according to AccuWeather in State College, Pennsylvania.

About 49 percent of U.S. households use gas for heating, Energy Information Administration data show. The agency is the energy department’s statistical arm.

Below Average

Inventories fell 111 billion cubic feet in the week ended Feb. 13 to 2.157 trillion, the EIA said, less than the five-year average decrease of 180 billion. The smaller-than-normal drop left supplies 2.8 percent above five-year average levels, the first surplus since November 2013.

Analyst estimates compiled by Bloomberg before the EIA report showed an expected stockpile decline of 111 billion cubic feet. Supplies were 46 percent above year-earlier levels, widening from 31 percent in last-week’s report.

“The storage number came in right around expectations and the market seems to have stabilized around this price level,” said Aaron Calder, an analyst at Gelber & Associates in Houston. “Demand is still being outstripped by production. The big question is whether the cold shot over the next two weeks will hit Texas and disrupt output.”

U.S. natural gas consumption may climb 1.4 percent this year to 74.34 billion cubic feet a day, driven by industrial users and power plants, the EIA said Feb. 10 in its monthly Short-Term Energy Outlook report.

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