Natural Gas Futures Rise as Arctic Chill May Extend Into March

Natural gas futures capped a second straight weekly gain in New York as forecasts showed a polar blast extending into early March.

Temperatures may be below normal in the Northeast and Midwest through March 6, according to MDA Weather Services in Gaithersburg, Maryland. The low in Chicago on Feb. 26 may be 6 degrees Fahrenheit (minus 14 Celsius), 19 less than average, data from AccuWeather Inc. show.

“Temperatures have dropped, and there are now forecasts showing the cold continuing late into the winter,” said Santiago Diaz, energy trading associate at FCStone Latin America LLC in Miami. “Gas is purely a weather play right now.”

Natural gas for March delivery rose 11.7 cents, or 4.1 percent, to $2.951 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 27. Volume for all futures traded was 51 percent above the 100-day average at 2:45 p.m. Gas gained 5.2 percent this week.

New York temperatures may drop to 14 degrees Fahrenheit on Feb. 26, 17 below normal, according to AccuWeather in State College, Pennsylvania.

A polar vortex, a weather pattern characterized by westerly winds that circle the Arctic, “is leading to the coldest weather of this recent cold spell, creating a deep layer of bitterly cold air along with gusty winds,” the National Weather Service said in a forecast discussion today.

Stockpile Report

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.

“With forecasts for a relatively sustained period of cold weather expected to last for the remainder of February, prices along the curve should also continue to see support,” Trevor Sikorski, an analyst at Energy Aspects Ltd. in London, said in a note to clients today.

Gas inventories totaled 2.157 trillion cubic feet as of Feb. 13, 2.8 percent above the five-year average for the week. By the end of last winter, the coldest since 1982 by a measure of heating demand, inventories were a record 55 percent below five-year average supplies after starting the season at a small surplus. Prices surged to $6.493 per million British thermal units on Feb. 24, a five-year high.

U.S. natural gas consumption may advance 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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