Looming Winter Boosts U.S. Natural Gas Futures for Second Day

  • Warm weather may give way to normal temperatures in U.S. East
  • Natural gas stockpiles seen rising 99 bcf in analyst survey

Natural gas bulls are gaining momentum as colder nights stoke heating demand.

Unusually warm weather in the central and eastern U.S. will probably give way to normal temperatures later this month, according to MDA Weather Services. An EIA report scheduled for release Thursday may show gas stockpiles rose by 99 billion cubic feet in the week ended Oct. 2, compared with the five-year average gain of 92 billion for the period, according to the median of 20 analyst estimates compiled by Bloomberg.

“The weather is going to get a bit colder, so we’ll see some additional demand with the lower temperatures,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We should see a pretty big stockpile gain this week, though, so that’s going to make it hard to extend gains.”

Natural gas for November delivery rose 0.4 cent to settle at $2.474 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 29 percent above the 100-day average at 2:55 p.m. Gas is down 14 percent this year.

The low in New York on Oct. 24 may be 43 degrees Fahrenheit (6 Celsius), 5 less than average, AccuWeather Inc. data show. Chicago’s temperature may fall to 37 degrees, 6 below normal. About 49 percent of U.S. households use gas for heating.

Gas Demand

Gas demand from power plants may jump 16 percent this year to 25.8 billion cubic feet a day as generators take advantage of low prices, the Energy Information Administration said Tuesday in its monthly Short-Term Energy Outlook. Consumption by electric generators is up 7.1 percent from a year ago, according to LCI Energy Insight in El Paso, Texas.

U.S. gas production slipped 0.3 percent in July to 89.46 billion cubic feet a day from the previous month, the EIA reported in September. Inventories were 4.5 percent above the five-year average as of Sept. 25. Supplies have been at a surplus to the norm since the week ended May 29.

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