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Natural gas prices edge higher on colder weather expectations

BY NICOLE HONG

NEW YORK -- Natural gas futures rose Wednesday as traders focused on short-term forecasts for colder weather.

Private forecaster Commodity Weather Group predicts cold weather along the West Coast will move--over the next six to 10 days--to the Midwest, a region that heavily depends on natural gas for home heating. When temperatures fall in the winter, gas demand typically rises--giving a boost to prices.

"Natural gas has gotten a boost in recent days because of the cold weather," said Phil Flynn, energy analyst at Price Futures Group.

"There' s a growing sense that short-term demand for natural gas is going to be strong," Mr. Flynn said.

Natural gas for March delivery settled 0.7 cent, or 0.2%, higher at $3.279 MmBTU on the New York Mercantile Exchange.

Prices also were supported by the nuclear-generating power plants shutting down for maintenance, which raises demand for natural-gas-fired plants, analysts and traders say.

Market players now are looking to the U.S. natural gas inventory data due at 10:30 a.m. Thursday from the U.S. Energy Information Administration. Inventories have seen smaller-than-expected declines in stockpiles for three straight weeks, sparking concerns that natural gas supply is outstripping demand.

Analysts expect Thursday' s inventory report to show 122 Bcf was withdrawn from storage last week, based on a Dow Jones Newswires survey of 13 analysts and traders, lower than the previous week' s 157 Bcf.

"We had warmer temperatures and less heating demand last week, so we' re expecting a weaker draw," said Tim Evans, analyst at Citi Futures Perspective.

If the storage estimate is correct, inventories as of Feb. 15 will total 2.405 Tcf, 9% below last year' s level, but 18% above the five-year average level for the same week.

The EIA reported last week in its monthly Short-Term Energy Outlook that it expects gas stockpiles at the end of winter to be less than two-trillion cubic feet, less than last year' s record storage level of roughly 2.5 Tcf but still more than the five-year average level.

Dow Jones Newswires

02/20/2013

 

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