First Hint of Heating Demand Boosts November Natural Gas Futures

  • Market starting to turn attention to coming of winter
  • Temperatures may be below normal in central U.S. next week

The season’s first signs of heating demand boosted November gas futures as the October contract expired.

Natural gas climbed as forecasts showed below-normal temperatures that would raise heating needs in parts of the Midwest next month. Bearish traders staged a record comeback last week as mild weather curtailed consumption.

“The market is starting to turn its attention to the coming winter,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Stamford, Connecticut. “The market has been heavily oversold, and it’s going to be tough to push prices much lower with colder weather still ahead.”

Natural gas for November delivery rose 3.9 cents, or 1.5 percent, to $2.67 per million British thermal units on the New York Mercantile Exchange. The October contract, which expired Monday, fell 0.1 cent to $2.563 per million Btu, the lowest settlement for next-month gas since April 28.

Weather Outlook

The weather may be cooler than usual in parts of the central U.S. from Oct 3. through Oct. 12, according to Commodity Weather Group LLC in Bethesda, Maryland.

The low temperature in Minneapolis may be 37 degrees Fahrenheit (3 Celsius) on Oct. 8, 5 degrees below average, data from AccuWeather Inc. show. About 49 percent of U.S. households use gas for heating.

Money managers’ short-only gas contacts jumped 23 percent in the seven days ended Sept. 22, the biggest percentage gain on record, after falling to a six-month low a week earlier, U.S. Commodity Futures Trading Commission data show.

Gas output from the Marcellus formation in Appalachia, the biggest-producing reservoir by volume, may slip 0.5 percent in October to 16.29 billion cubic feet a day, declining for a third straight month, the U.S. Energy Information Administration said Sept. 19 in its monthly Drilling Productivity Report.

Natural gas prices will probably trade below $3 per million Btu through November, boosting demand from power plants, the EIA said Sept. 9 in its monthly Short-Term Energy Outlook. Consumption by electricity generators may surge 14 percent this year, according to the report.

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