U.S. Gas Surges to 6-Week High on Outlook for December Coldby
U.S. natural gas futures jumped to a six-week high before the December contract expiration as forecasts showed widespread cold that will boost demand for the heating fuel.
Most of the country may see a mix of average and below-normal temperatures Dec. 8 through Dec. 12, according to MDA Weather Services. Chicago’s low will probably drop to 18 degrees Fahrenheit (minus 8 Celsius) on Dec. 9, 6 below the usual reading, data from AccuWeather Inc. show.
Gas prices are gaining ground as frigid weather creeps into December forecasts, prompting speculation that an extended chill will cut into record stockpiles of the fuel. Rising gas exports and a slowdown in output from shale formations have stoked demand, leaving the market vulnerable to supply constraints during the winter.
“We’re finally seeing some cold weather in the back end of the forecast,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “It’s going to get progressively colder and colder, and traders are starting to pile in.”
Gas futures for December delivery rose 14.7 cents, or 4.8 percent, to $3.232 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Oct. 18.
December gas expired Monday. The more actively traded January contract climbed 3.7 percent to $3.32.