Cold Outlook Resuscitates U.S. Gas After Slump to 16-Year Lowby
Northeast temperatures may drop below normal in January
Gas supplies are at record seasonal surplus to 5-year average
Hints of wintry weather are reviving U.S. natural gas futures as prices rebound from a 16-year low.
A midday update to the government’s Global Forecast System weather model showed below-normal temperatures on the East Coast and in the Great Lakes region from Jan. 2 through Jan. 6. The low in Cleveland on Jan. 3 may be 20 degrees Fahrenheit (minus 7 Celsius), 4 less than usual, AccuWeather Inc. data show.
Gas prices have slumped this year as mild weather curtailed demand for the heating fuel, boosting a stockpile surplus to the five-year average. Supply from shale reservoirs is filling storage caverns across the U.S., and production is on course to reach a fifth straight annual record.
“To the extent that we do get more seasonable weather, prices are primed to make a run at $2,” said John Kilduff, partner at Again Capital LLC. “The market is trying to install a floor near $1.68.”
Gas futures for January delivery rose 9.5 cents, or 5 percent, to settle at $1.983 per million British thermal units on the New York Mercantile Exchange, the highest close since Dec. 11. Prices are down 31 percent this year after dropping to $1.684 on Dec. 18, the lowest intraday price since March 19, 1999.
Stockpiles totaled 3.846 trillion cubic feet as of Dec. 11, 9.1 percent above the five-year average, the biggest glut on record for the time of year.