Natural gas climbed in New York, heading for the first weekly increase this month, on forecasts of below-normal temperatures that may spark greater demand for the heating fuel.
Gas advanced as colder-than-normal weather may blanket most of the eastern U.S. from Nov. 24 through Nov. 28, according to Commodity Weather Group in Bethesda, Maryland. Temperatures in parts of the Midwest may be as much as 8 degrees Fahrenheit below normal, the company said.
“It looks pretty inevitable that the market has gains in front of it,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Natural gas for December delivery rose 9.1 cents, or 2.3 percent, to $4.098 per million British thermal units at 12:23 p.m. on the New York Mercantile Exchange. The contract, down 26 percent this year, has gained 7.9 percent this week.
“Once we get our first real signs of heating demand, the market will probably reach $4.50 or $4.75,” McGillian said.
Temperatures may be below normal on the East Coast and parts of the Southeast and Great Lakes region from Nov. 29 through Dec. 3, Commodity Weather Group said.
The high temperature in Chicago on Nov. 25 may be 31 degrees Fahrenheit (minus 1 Celsius), 12 degrees below normal, according to AccuWeather Inc. in State College, Pennsylvania.
“A surge of record warmth will make it into the Ohio Valley Sunday into Monday, but the cold coming is going to be the most extreme shot to end the month of November in many a year,” said Joe Bastardi, a senior meteorologist at AccuWeather Inc., in a note to clients.
Fuel Use
Heating demand in the U.S. may average 20 percent above normal from Nov. 25 through Nov. 29, according to David Salmon, a meteorologist with Weather Derivatives in Belton, Missouri.
About 52 percent of U.S. households use natural gas for heating, Energy Department data show.
Gas inventories may total 1.776 trillion cubic feet at the end of the winter heating season in March, up about 114 billion cubic feet from a year earlier, the Energy Department estimated on Nov. 9 in the monthly Short-Term Energy Outlook.
Gas inventories gained 3 billion cubic feet in the week ended Nov. 12 to 3.843 trillion cubic feet, the Energy Department said in a report yesterday. The increase left stockpiles 9.3 percent above the five-year average level for that week and 0.3 percent above last year’s level, signaling ample supplies for the winter, when use of the fuel peaks.
“Cold temperatures would need to linger for some time to work off the current storage overhang,” wrote James R. Crandell, an analyst with Barclays Capital in New York, in a note to clients today.
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