Shutterstock photo
Markets

Natural gas futures rally to 7-week high on cold weather outlook

Shutterstock photo

Shutterstock photo

Investing.com - Natural gas futures extended strong gains from the previous session to hit a seven-week high during U.S. morning trade on Monday, as forecasts showing colder weather in the coming week boosted near-term demand expectations for the heating fuel.

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 USD3.626 per million British thermal units during U.S. morning trade, up 1.7% on the day.

It earlier rose by as much as 2% to trade at a session high of USD3.639 per million British thermal units, the strongest level since December 7.

Trade was expected to remain subdued on Monday, as floor trading on the NYMEX was to remain closed for the Martin Luther King Jr. holiday.

Natural gas prices surged 6.8% last week, the second consecutive weekly advance and the biggest weekly gain in two months.

The heating fuel has rallied nearly 17% since falling to a four-month low of USD3.087 per million British thermal units on January 9, boosted by calls for colder temperatures in major consuming regions across the U.S.

Updated weather forecasts released over the weekend continued to call for below-normal readings for most of the Eastern half of the U.S. in the next six-to-ten days, increasing near-term demand expectations for the heating fuel.

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. Nearly 50% of all U.S. households use gas for heating.

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

The U.S. Energy Information Administration said that natural gas storage in the U.S. in the week ended January 11 fell by 148 billion cubic feet, compared to expectations for a decline of 136 billion cubic feet.

Inventories fell by 89 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 144 billion cubic feet.

Total U.S. natural gas storage stood at 3.168 trillion cubic feet as of last week, 4.4% below last year's level and 11.1% above the five-year average for this time of year.

Early withdrawal estimates for this week's storage data range from 122 billion cubic feet to 190 billion cubic feet.

Inventories fell by 162 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 176 billion cubic feet.

If withdrawals for the rest of winter season match the five-year average pace, inventories will end the heating season at 2.044 trillion cubic feet, nearly 18% below last year's end-winter record of 2.48 trillion cubic feet, but still almost 18% above normal.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March shed 0.4% to trade at USD95.67 a barrel, while heating oil for February delivery dipped 0.1% to trade at USD3.050 per gallon.

Investing.com - Investing.com offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

Read more News on Investing.com or Follow us on Twitter at @ Newsinvesting

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.

Other Topics

ForEx