Natural Gas Futures Rallies as Colder-Than-Normal Weather May Spur Demand

Natural gas futures rose, heading for a third weekly gain, as forecasts showed colder-than-normal weather, boosting demand for the heating fuel.

Gas is up 2.5 percent this week as the Climate Prediction Center forecast cooler-than-usual weather for the eastern U.S. from March 30 to April 7. The low temperature in New York will be 26 degrees Fahrenheit (minus 3 Celsius) tomorrow, 12 degrees below normal, according to AccuWeather Inc. in State College, Pennsylvania.

“We are clearly having a cold spell and it’s supporting the gas market,” said James Williams, an economist at WTRG Economics, an energy research firm in London, Arkansas. “The rig count is also falling, which should lead to lower production.”

Natural gas for April delivery gained 2.8 cents, or 0.7 percent, to $4.272 per million British thermal units at 9:30 a.m. on the New York Mercantile Exchange. The futures are up 7.2 percent from a year ago.

The number of gas drilling rigs in the U.S. declined 7 to 875 last week, the lowest level since Jan. 29, 2010, according to Houston-based Baker Hughes Inc.

This week’s rig report will be released today.

(Source: http://www.bloomberg.com/news/2011-03-25/natural-gas-futures-little-changed-in-new-york-on-colder-weather-storage.html)