Natural Gas Futures Advance on Forecasts for Extended Chill

Natural gas futures capped the first monthly gain since November as forecasts showed below-normal temperatures extending into the middle of March.

The weather may be colder than average in the eastern U.S. through March 13, according to MDA Weather Services in Gaithersburg, Maryland. The low in New York on March 6 may be 22 degrees Fahrenheit (minus 6 Celsius), 10 less than usual, data from AccuWeather Inc. show. Gas slumped the most in five weeks Thursday after a government report showed a below-forecast decline in stockpiles.

“We’ve consistently had temperatures that are below average, and it looks like that’s going to continue,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We’re ticking to the upside after yesterday’s downward move, which was probably a little bit exaggerated.”

Natural gas for April delivery rose 3.7 cents, or 1.4 percent, to settle at $2.734 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 48 percent below the 100-day average at 2:39 p.m. Prices advanced 1.6 percent this month.

Washington’s temperature may drop to 26 degrees on March 6, 9 below normal, according to AccuWeather in State College, Pennsylvania.

Cold February

In terms of natural gas-weighted heating degree days, February is forecast to finish at 948.3, which would be the coldest across the contiguous U.S. since 1979, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland.

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.

The number of rigs drilling for natural gas in the U.S. fell by nine to 280 last week, the lowest level since 1993, data from Baker Hughes Inc. showed.

Gas stockpiles totaled 1.938 trillion cubic feet as of Feb. 20, 1.5 percent below 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 the weekly average after starting the season at a small surplus.

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.

Gas production in the lower 48 states rose 1.7 percent in December to a record 83.03 billion cubic feet a day from the previous month, the agency said Friday in its monthly EIA-914 report. Output from “other states” category, which includes the Marcellus shale formation in the Northeast, climbed 3 percent to 34.26 billion a day.

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