Natural gas advances on outlook for cooler late December

Natural gas futures climbed in New York for the first time in eight days as revised forecasts showed below-normal temperatures that could spur heating demand.

Gas gained as much as 1.9 percent after Commodity Weather Group LLC in Bethesda, Maryland, predicted colder-than-usual weather across most of the lower 48 states from Dec. 27 through Dec. 31. Earlier outlooks forecast above-average temperatures on the East Coast. Prices settled at an 11-week low of $3.314 per million British thermal units on Dec. 14.

“The colder-than-normal temperatures are giving us a little bit of a short-term bounce,” said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. “The market had been looking oversold after last week’s declines.”

Natural gas for January delivery rose 2.3 cents, or 0.7 percent, to $3.336 per million British thermal units at 9:47 a.m. on the New York Mercantile Exchange. The futures are up 6.7 percent this year, heading for the first annual gain since 2007.

Net-long bets on four U.S. natural gas contracts shrank by 18,460 futures equivalents, or 17 percent, to 92,119 in the week ended Dec. 11, according to data released Dec. 14 by the Commodity Futures Trading Commission.

The measure includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swap Futures, Nymex ClearPort Henry Hub Penultimate Swaps and the ICE Futures U.S. Henry Hub contract. Henry Hub, in Erath, Louisiana, is the delivery point for Nymex futures, a benchmark price for the fuel.

Weather Outlook

The low in St. Louis on Dec. 30 may be 22 degrees Fahrenheit (minus 5 Celsius), 1 below the usual reading, according to AccuWeather Inc. in State College, Pennsylvania. The low in Cleveland may be 21 degrees, 4 lower than normal.

About 50 percent of U.S. households use gas for heating, Energy Department data show.

Gas inventories rose 2 billion cubic feet in the week ended Dec. 7 to 3.806 trillion cubic feet, the Energy Department reported Dec. 13. It was the latest seasonal supply gain since the week ended Dec. 30, 2005, according to department data compiled by Bloomberg.

Supplies were 8 percent above the five-year average, compared with 4.6 percent the previous week. The gas inventory surplus to the average has declined from a six-year high of 61 percent in March, department data show.

Total SA has agreed to purchase liquefied natural gas from Cheniere Energy Partners LP’s Sabine Pass facility in Louisiana under a 20-year agreement.

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