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Sep 06, 2010
US GAS: Futures Climb On Forecasts For February Cold SpellFeb 08, 2010
By Jason Womack
Of DOW JONES NEWSWIRES
HOUSTON (Dow Jones)--Natural gas futures climbed Monday on forecasts for cold weather over the next few weeks and expectations for a jump in gas heating demand.
Natural gas for March delivery on the New York Mercantile Exchange was trading 8.2 cents higher, or 1.49%, at $5.597 a million British thermal units. The front-month contract climbed as high as $5.68/MMbtu in earlier trading.
Meteorologists are predicting colder-than-normal temperatures deep into February. The National Weather Service is forecasting below-normal temperatures across most of the country from Feb. 15 to Feb. 21--including key natural gas demand centers in the Northeast and the Midwest. Cold temperatures are also expected across the Southeast, the Mid-Atlantic and Texas over that same period.
"We have forecasts for two to three weeks of cold weather and that is driving the market higher," said Gene McGillian, an analyst with Tradition Energy in Stamford, Conn.
A prolonged period of frigid temperatures can boost demand for natural gas to heat homes and businesses and help draw down robust levels of natural gas in storage.
Natural gas in U.S. storage for the week ended Jan. 29 stood at 2.406 trillion cubic feet--9% higher than last year and 6.6% above the five-year average.
Storage levels swelled last year as natural gas producers continued to unlock vast new supplies of the fuel from rapidly developing gas fields known as shales. At the same time, the economic downturn undermined gas demand.
High levels of gas in storage have helped ease concerns over short-lived demand spikes.
Jim Ritterbusch, president of the energy-advisory firm Ritterbusch & Associates, wrote in a note to clients on Monday that the forecasted cold spell could bring gas stockpiles down to near last year's levels by the end of the heating season.
The cold weather and its potential impact on storage levels "has been a bullish dynamic" for the market, Ritterbusch wrote.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com [back] |
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