Natural gas futures advanced for a second day in New York on speculation that colder weather will help erode a surplus of the heating fuel.
Gas rose as much as 2% after forecasters including MDA Weather Services in Gaithersburg, Maryland, said below-normal temperatures in the western U.S. next week will spread into the Northeast over the next 11 to 15 days. Previous predictions showed that a recent cold blast would give way to warmer weather.
“It’s not as warm as some of the traders were predicting and that’s giving us a bounce,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “When you look at this week’s inventory report, it’s going to reflect some of the coldest weather this year.”
Natural gas for February delivery gained 5.6 cents, or 1.7%, to $3.343 per million British thermal units at 9:46 a.m. on the New York Mercantile Exchange. Trading volume was 34% below the 100-day average. Gas prices have risen 9.2% from a year ago.
The low temperature in Green Bay, Wisconsin, on Jan. 21 will be 10 below the usual reading at minus 1 Fahrenheit (minus 18 Celsius), compared with a low of 31 degrees on Jan. 10, 22 above normal, according to AccuWeather Inc. in State College, Pennsylvania.
About 50% of U.S. households use gas for heating, Energy Department data show.
Unusually cold weather helped reduce a gas surplus at the end of December after it widened earlier in the month, according to the department’s weekly gas inventory report released Jan. 4.
U.S. stockpiles fell 135 billion cubic feet to 3.517 trillion in the week ended Dec. 28, exceeding the five-year average drop for the week of 111 billion.
A gas surplus to the five-year average fell to 12.4% from 12.8% the previous week, the department said. The supply gap from year-earlier levels narrowed to 0.7% from 2.3%.