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Natural gas futures rally 2% on freezing U.S. weather

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Investing.com - Natural gas futures rallied sharply on Tuesday, as freezing temperatures in the U.S. Northeast was likely to boost near-term heating demand expectations.

On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.406 per million British thermal units during U.S. morning trade, up 2.3%. Nymex January gas futures rose by as much as 3.35% earlier in the day to hit a session high of USD4.429, the strongest level since December 31.

The February contract settled 0.05% higher on Monday to end at USD4.306 per million British thermal units. Natural gas futures were likely to find support at USD4.266 per million British thermal units, the low from January 6 and resistance at USD4.447, the high from December 31.

Updated weather forecasting models called for frigid temperatures across the eastern two-thirds of the U.S. through January 11.

Temperatures in eastern states are forecast to be the coldest since the mid-1990s. In New York they are set to drop to minus 14 Celsius from a high of 13 Celsius on Monday, as the effects of the chill extend as far south as Florida

Bullish speculators are betting that the freezing weather will increase demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.

Meanwhile, U.S. supply levels remained in focus. Total U.S. natural gas storage stood at 3.071 trillion cubic feet as of last week, approximately 16% below last year's unusually high level and nearly 9% below the five-year average for this time of year.

Early withdrawal estimates for this week's storage data range from 115 billion cubic feet to 160 billion cubic feet, compared to a drop of 126 billion cubic feet during the same week a year earlier. The five-year average change for the week is a decline of 131 billion cubic feet.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February added 0.2% to trade at USD93.61 a barrel, while heating oil for February delivery rose 0.55% to trade at USD2.954 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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