Natural Gas Futures Climb on Revised Forecasts of Cold Weather

Natural gas futures rose for a second day on revised forecasts showing below-normal temperatures in the central and eastern U.S. at the end of February.

Gas rose 1.3 percent as midday updates from forecasters including MDA Federal Inc.’s EarthSat Energy Weather predicted colder-than-normal weather across the Northeast and parts of the Midwest from Feb. 25 through March 1. Earlier forecasts from the Rockville, Maryland-based company showed normal or above-normal temperatures in those regions.

“You can have some cold episodes in February,” said Carl Neill, an energy consultant at Risk Management Inc. in Atlanta. “Prices may bounce a little, but the market’s still in a seasonal slide as we get closer to the end of the winter.”

Natural gas for March delivery rose 5.1 cents to settle at $3.976 per million British thermal units on the New York Mercantile Exchange. The futures have declined 27 percent from a year ago.

The low temperature in New York on Feb. 28 may be 24 degrees Fahrenheit (minus 4 Celsius), 7 degrees below normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Detroit may be 16 degrees, 7 degrees below normal.

About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.

“There is a cold front moving to the East in two weeks and that helped gas,” said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas. “There may be a substantial withdrawal in Thursday’s report and some of the price changes could be people betting on that report.”

Stockpile Report

The Energy Department may report a larger-than-normal withdrawal from U.S. gas inventorieson Feb. 17 because of cold weather last week.

About 237 billion cubic feet of gas were withdrawn from storage in the week ended Feb. 11, above the five-year average decline for the week of 150 billion, according to the median of 10 analyst estimates compiled by Bloomberg.

U.S. gas stockpiles declined 209 billion cubic feet in the week ended Feb. 4 to 2.144 trillion, the Energy Department reported last week.

The storage drop was bigger than the five-year average decline of 159 billion cubic feet, department data showed. The storage level was 2.1 percent below the five-year average, declining to a deficit for the first time since Jan. 15, 2010.

Gulf South Pipeline Co., a unit of Boardwalk Pipeline Partners LP, reduced gas flows through a line in Texas after a fire in a compressor station, said Allison McLean, a Boardwalk spokeswoman in Houston.

Texas Gas

Boardwalk owns and operates more than 14,000 miles (22,526 kilometers) of pipelines in 12 states, according to the company’s website.

Scheduled gas delivery to the Texas power plants declined 1 percent to 1.07 million dekatherms (about 1.04 billion cubic feet), according to data compiled by Bloomberg. Scheduled gas deliveries to the state’s residents dropped 14 percent to 600,111 dekatherms.

Gas futures volume in electronic trading on the Nymex was 248,534 as of 3:31 p.m., compared with the three-month average of 303,000. Volume was 297,149 yesterday. Open interest was 940,734 contracts. The three-month average open interest is 805,000.

The exchange has a one-business-day delay in reporting open interest and full volume data.

(Source: http://www.bloomberg.com/news/2011-02-15/natural-gas-drops-near-three-month-low-in-new-york-on-weather-outlook.html)