DJ Winter Weather Fuels Natural Gas Rally
By Christian Berthelsen
Natural gas futures jumped 3% Monday as a polar vortex settled over the Midwest and the forecast turned colder for
the eastern U.S. into the end of the month, spurring expectations for gas-fired heating demand.
Natural gas for December delivery rose 11.7 cents to $4.1370 a million British thermal units on the New York
Mercantile Exchange, extending Friday's rally that snapped a four-session losing streak.
After the current mass of frigid air over the Midwest passes at the end of this week, new forecasts say temperatures
are expected to warm up for a few days over much of the country through the middle of next week. That would be followed
by a cold pattern over much of the eastern U.S. which would bring back below-normal temperatures.
Cold weather drives demand for natural gas, which is used to heat about half of U.S. homes.
After months of market worries over gas stockpiles that were depleted last winter, U.S. producers have rebuilt
inventories. The amount of gas in storage grew more than expected last week and resulted in the 32nd straight week of
stockpile growth, but some analysts predict the emergence of cold temperatures last week will prompt the first storage
decline of the heating season in data released this week.
"The weather is colder than normal for this time of year and will definitely result in an above-normal call on
natural gas for heating-related demand," Energy Management Institute analyst Dominick Chirichella said in a note. "This
will be the first week of the inventory withdrawal season based on the cold weather that hit the middle of the country
last week."
Total natural gas inventories stood at 3.6 trillion cubic feet after last week's storage increase, surpassing the
level analysts say will be adequate to get through heating season. Still, inventories remain 6.2% below average levels
for this time of year.
In the physical market, cash prices for next-day gas delivery at the benchmark Henry Hub in Louisiana last traded at
$4.19 a million Btus, above Friday's range of $4.00-$4.08. At the Transco Z6 hub in New York, prices traded in a
bid-offer range of $4.10-$8.00, above Friday's range of $3.50-$4.00.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
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(END) Dow Jones Newswires
November 17, 2014 09:29 ET (14:29 GMT)
Copyright (c) 2014 Dow Jones & Company, Inc.
111714 14:29 -- GMT
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