U.S. Gas Bulls Stage Comeback on Forecasts for Cooler Weatherby
As far as U.S. natural gas bulls are concerned, futures have been low enough for long enough.
Gas capped the first weekly gain since January as forecasts showed a return to normal weather in the eastern U.S. after a warm spell. Prices slid to a 17-year low last week as above-normal temperatures expanded the biggest stockpile glut since 2012.
Bullish traders are looking past the supply overhang, betting that low prices will boost demand from power plants and force producers to curtail supplies. Until that happens, output from shale formations will keep filling storage caverns, pressuring futures lower.
“We’re seeing speculators covering short positions on the weather outlook,” said Thomas Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “It’s March, so there’s no arctic blast on the horizon, but temperatures are going to be a little cooler.”
Natural gas for April delivery rose 3.4 cents, or 1.9 percent, to settle at $1.822 per million British thermal units on the New York Mercantile Exchange. Gas climbed 9.4 percent this week.