Natural Gas Gains as Cooler Weather to Boost Heating Demand

Natural gas futures gained in New York on speculation that cooler-than-normal weather will boost heating needs, slowing a seasonal stockpile increase.

Temperatures may be average or below normal across most states east of the Rocky Mountains from April 17 to 21, according to MDA Weather Services in Gaithersburg, Maryland.

“I think the weather forecast is modestly supportive,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “April is looking to be a little cooler than expected.”

Natural gas for May delivery advanced 3 cents, or 1.1 percent, to settle at $2.68 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 33 percent below the 100-day average at 3:21 p.m. Prices are down 7.2 percent this year.

Gas inventories totaled 1.461 trillion cubic feet as of March 27, 11.5 percent below the five-year average, compared with a record 55 percent at the end of March 2014.

The low temperature in Chicago April 17 will be 52 degrees Fahrenheit (11 Celsius), 8 less than normal, according to AccuWeather Inc. of State College, Pennsylvania. About half of U.S. households use gas for heating.

Power plants running on natural gas will account for 30 percent of U.S. electricity generation in 2015, according to the Energy Information Administration’s monthly Short-Term Energy Outlook, up from 29 percent in last month’s report. Demand from power plants will climb to 24.9 billion cubic feet a day.

October Supplies

The amount of natural gas in storage at the end of October will total 3.781 trillion cubic feet, down from 3.856 trillion estimated in last month’s report.

Natural gas output in 2015 will rise to 78.47 billion cubic feet a day, up from 78.39 billion in last month’s report. The EIA left unchanged its outlook for 2015 Henry Hub gas prices at $3.07 per million Btu.

EIA data scheduled for release Thursday in Washington may show that gas stockpiles rose 7 billion cubic feet in the week ended April 3, according to the median of seven analyst estimates compiled by Bloomberg. The five-year average change for the period is a drop of 2 billion.

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