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Natural gas futures climb to 1-week high on cold weather forecasts

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Investing.com - Natural gas futures rose nearly 2% during early U.S. morning trade on Monday, as market players continued to focus on shifting weather forecasts for the next few weeks to gauge the strength of U.S. heating demand.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on winter heating demand.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD3.334 per million British thermal units during U.S. morning trade, up 1.4% on the day.

It earlier rose by as much as 1.9% to trade at a session high of USD3.352 per million British thermal units, the strongest level since December 31.

Updated weather forecasts released over the weekend showed that colder-than-normal weather was expected across key parts of the U.S. later in January and into early-February, boosting sentiment on the heating fuel.

The latest National Weather Service six-to-10-day forecast issued on Sunday called for below or much-below-normal readings for the most of the country during the period.

Weather service provider WSI said that it expected temperatures to fall below normal in the western half of the U.S. from January 13 through January 17.

Bullish speculators are betting on the cool weather increasing winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.

Meanwhile, last week's larger-than-expected drawdown from winter inventories also kept momentum to the upside.

The U.S. Energy Information Administration said Friday that natural gas storage in the U.S. in the week ended December 28 fell by 135 billion cubic feet, compared to expectations for a decline of 127 billion cubic feet.

Inventories fell by 77 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 111 billion cubic feet.

Total U.S. natural gas storage stood at 3.517 trillion cubic feet as of last week, 0.7% higher than last year's level and 12.4% above the five-year average for this time of year.

Early withdrawal estimates for this Thursday's storage data range from 155 billion cubic feet to 176 billion cubic feet. Inventories fell by 137 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 165 billion cubic feet.

The heating fuel has lost nearly 17% since touching a 14-month high of USD4.001 per million British thermal units on November 26, on speculation that temperatures won't be cold enough to erase a surplus of the fuel in storage.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February eased up 0.1% to trade at USD93.16 a barrel, while heating oil for February delivery added 0.3% to trade at USD3.026 per gallon.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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