US GAS: Futures Hit 6-Week High On Cold View, Momentum Buying

NEW YORK (Dow Jones) - Natural gas futures rose on Tuesday to their highest levels in more than six weeks on forecasts of cold weather and increased demand for heating oil and the continuing upward momentum of previous developments .
Natural gas for April delivery settled 9.3 cents, or 2.2% higher at $ 4254 a million British thermal units on the New York Mercantile Exchange, the highest price ending February 4.
Future support as forecasters continued to see a snap in late March cold in major markets in the Upper Midwest and Northeast, which probably indicates significant cold season for gas heating needs .
short-term changes in weather forecasts tend to decrease in importance in the natural gas market as temperatures moderate during the spring season on the shoulder of low demand, but the consensus outlook for climate much colder than normal from Minneapolis to Boston helped lift the market.
The temperature must be colder than normal in the upper Midwest and Northeast for most of next week, private forecasters forecaster Commodities Group, said in a note to clients Tuesday. Mild to warm temperatures are normal during the period in the Rocky Mountain states and Gulf Coast.
Futures also rose up the momentum and gains from last week pushed the market to its highest level since February and encouraged some buying on speculation that the trend will continue, said Tom Saal, a broker with Future INTL Hencorp in Miami.
"It seems that [the event] has the opportunity to get some legs under it," said Michael K. Smith, president of futures brokerage T and K Futures and Options "Everyone was so short, this upward trend suddenly" taken by surprise traders, he added, referring to bets that prices would fall.
Many market participants had been content to bet that the market would remain the subject heading to spring, and the benchmark futures contract spent weeks shuffling between $ 3.80 and $ 4.
But uncertainty over global supplies of fuel for power plants and the viability of nuclear energy after the Japanese crisis and a weekly drawing surprisingly large U.S. inventories sent traders who had bet prices would fall to the ground to close the positions.
The momentum has been the benchmark contract higher on three of the last four sessions, and up to 8% in that period.
Analysts said the gains may be fleeting, as U.S. production is expected to outstrip demand in the first half of the year.

 
   FUTURES           SETTLEMENT         NET CHANGE 
   Nymex April         $4.254            +9.3c 
   Nymex May           $4.331            +9.0c 
   Nymex June          $4.396            +8.3c 
 
   CASH HUB            RANGE            PREVIOUS DAY 
   Henry Hub           $4.02-$4.14      $3.93-$4.04 
   Transco 65          $4.02-$4.16      $3.93-$4.00 
   Tex East M3         $4.35-$4.50      $4.26-$4.45 
   Transco Z6          $4.68-$4.96      $4.48-$4.70 
   SoCal               $4.09-$4.22      $4.02-$4.18 
   El Paso Perm        $3.95-$4.04      $3.88-$3.95 
   El Paso SJ          $3.90-$3.95      $3.83-$3.86 
   Waha                $3.97-$4.04      $3.92-$3.95 
   Katy                $3.99-$4.08      $3.90-$3.98 
 

(Source: http://online.wsj.com/article/BT-CO-20110322-712322.html)