Natural gas futures jumped to a three-week high in New York as storms and cold weather boosted heating demand, cutting stockpiles to the lowest in 10 years.
Gas surged 6.5 percent as the second storm in three days brought snow to the Northeast. Government data Feb. 20 may show that inventories tumbled 249 billion cubic feet in the week ended Feb. 14, according to Donald Murry, an economist at C.H. Guernsey & Co. in Oklahoma City. The five-year average drop is 133 billion for the period. U.S. gas supplies are the lowest for this time of year since 2004.
“The market is showing some strength,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “We’re still in winter and as long as these triple-digit withdrawals continue, we’re going to see continued upside.”
Natural gas for March delivery rose 33.7 cents to $5.551 per million British thermal units on the New York Mercantile Exchange, the highest settlement since Jan. 29. Trading volume was 19 percent above the 100-day average at 2:43 p.m. Gas futures are up 31 percent this year, the second-biggest gainer in the Standard & Poor’s GSCI index of 24 commodities, after coffee.
The Nymex floor was closed yesterday for the U.S. Presidents Day holiday. Electronic trading yesterday counted toward today’s settlement.
March gas traded 79.8 cents above the April contract, compared with 63.7 cents on Feb. 14 and 17.8 cents a month ago. Implied volatility for April at-the-money options was 42.91 percent at 3 p.m., compared with 30.89 percent for the front- month contract a year ago.
March $7 calls were the most active options in electronic trading. They were 1.3 cents lower at 4.6 cents per million Btu on volume of 2,670 at 3:06 p.m. Calls accounted for 74 percent of trading volume.
Today’s storm brought 1.5 inches (3.8 centimeters) of snow to New York’s Central Park, the National Weather Service said.
A winter storm warning was in effect for southern Maine, New Hampshire and areas north of Boston. The city may get 2-4 inches of snow from the weather system, which triggered the cancellation of 640 flights today.
Commodity Weather Group LLC in Bethesda, Maryland, forecast colder-than-normal weather in the Northeast and Midwest from Feb. 23 through March 4.