U.S. Natural Gas Heads for Biggest Gain Since January Amid Cold

Natural gas futures headed for the biggest one-day gain in New York since Jan. 29 on speculation that unseasonably cold weather will trim a fuel stockpile glut.

Most of the eastern U.S. will see below-normal temperatures April 9 through April 13, according to MDA Weather Services. The high in Chicago on April 12 may be 55 degrees Fahrenheit (13 Celsius), 3 lower than average, according to AccuWeather Inc.

“A little winter weather is going a long way,” John Kilduff, a partner at Again Capital LLC in New York, said in a phone call. “It looks like this cold snap is a little more intense and a little longer-lasting than initially thought.”

Natural gas futures for May delivery jumped 9.8 cents, or 5 percent, to $2.054 per million British thermal units at 10:17 a.m. on the New York Mercantile Exchange after rising as high as 6 percent. Prices are down 13 percent for the year.

Natural gas producers are using a rally in prices to hedge more output, Morgan Stanley analysts said in a research note Monday. Gas for delivery in August 2017 on the Nymex has risen 12 percent since the end of February, while producer and merchant bets on falling prices -- a common hedging strategy -- rose to the highest level since December.

Gas deliveries to power plants climbed 7.4 percent from a year ago to 21 billion cubic feet a day as of 10:09 a.m. Monday, according to PointLogic Energy in El Paso, Texas.

“We got a little bit of unseasonably cold weather,” Thomas Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami, said by phone.

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