NEW YORK-Natural-gas futures ended higher Wednesday on expectations for late January cold and an above-average weekly draw from US gas supplies. Natural gas for February delivery settled up 5 cents, or 1.1 per cent, at US$4.531 a million British thermal units on the New York Mercantile Exchange. The benchmark contract has advanced for two consecutive days as forecasts for cold across much of the eastern US near the end of January increased demand expectations for the heating fuel.
"It's looking like it will probably stay cold at least into the last week of January," said Stephen Strum, president of private forecaster Frontier Weather. "The overall trend is still for the eastern half of the country to be below normal, the question is how long it will last." Natural-gas prices have closely tracked forecasts recently, as market participants try to gauge the weather's impact on heating demand and its effect on inventories. Strum said that though this winter's chill has been less widespread than last year's, it has been colder in the major heating markets along the East Coast.
"We've had a really decent heating season" so far, said Chris Jarvis, president of Caprock Risk Management, adding that the market is likely "consolidating and looking to make a move higher." Winter weather has sent gas futures about 40 per cent higher since reaching their late October lows below US$3.30/MMBtu. Recent withdrawals from US gas stockpiles have been larger than normal, reducing the supply surplus that has pressed the market, and analysts are expecting a report of another large withdrawal Thursday.
The federal Energy Information Administration is expected to report that 142 billion cubic feet of gas was withdrawn from storage during the week ended Jan. 7, according to the average prediction of 20 gas analysts and traders in a Dow Jones Newswires survey. The five-year average draw for the week is 108 bcf, said Tim Evans, an analyst with Citi Futures Perspective. US stockpiles hit a record high in November but have fallen since to 3.097 trillion cubic feet as of December 31, according to the EIA. That's about 6.5 per cent above the five-year average, down from about 10 per cent higher than average in November. (Dow Jones)