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Natural gas set for biggest weekly gain since 2012 on U.S. cold

BY CHOU HUI HONG and ANNA SHIRYAEVSKAYA

NEW YORK (Bloomberg) -- Natural gas rose for a fourth day in New York and headed for the biggest weekly gain since September 2012 as meteorologists predicted U.S. temperatures will remain below normal through the end of this month.

Futures for February delivery increased as much as 3.6 percent to $4.899 per million British thermal units in electronic trading on the New York Mercantile Exchange, and traded at $4.898 at 5:05 a.m. local time. The contract climbed 0.9 percent to $4.73 yesterday, the highest settlement since June 10, 2011. The volume of all futures traded was about 3 percent below the 100-day average. Prices are up 13 percent this week.

Temperatures across the eastern U.S. and parts of Ontario and Quebec will be at least 8 degrees below normal through Jan. 27, said Matt Rogers, president of the Commodity Weather Group LLC in Bethesda, Maryland. Next week will be colder, he said.

“Whenever you get cold, the market moves quite rapidly in the States,” Trevor Sikorski, head of natural gas, coal and carbon at Energy Aspects Ltd. in London, said by phone. “How high will prices go? I think it depends on the storage inventories and how low they start to go and whether or not people start getting really worried that at some point you get very low levels of working gas left.”

Temperatures in Chicago fell lower than in the South Pole this month as freezing weather boosted energy consumption, grounded thousands of flights across the U.S. and disrupted operations at refineries and natural gas production sites.

“A wave of low pressure along the cold front currently settling into the southern states is expected to spread a rare coating of ice across southeast Texas and southwestern Louisiana,” the National Weather Service said. Houston may get 0.25 inch of freezing rain and possibly some snow, according to the weather service.

Wind chill warnings and advisories stretch from Canada to the U.S. Gulf Coast and a winter storm warning has been issued in Houston, according to the National Weather Service.

Temperatures in the U.S. Northeast will remain in the low teens to even single digits through this weekend, according to the weather service. Readings may reach seasonal levels by Jan. 25 before dropping back down again.

Chicago has had nine days, and in Milwaukee, where readings have fallen to zero or below, there have been eight so far this month, according to the weather service.

Arctic air returned to the U.S. after frigid weather set temperature records across the Midwest earlier this month, with readings falling to single digits in the South. January is on track to be the coldest month in the lower 48 states since 1994, and this winter may be the most chilly since the 1990s, according to Commodity Weather Group in Bethesda, Maryland.

The cold weather will persist in the eastern half of the U.S. through Feb. 1, it said.

“Bitter cold” is forecast to sweep east of the Mississippi River through the end of January, said MDA Weather Services in Gaithersburg, Maryland. The low in New York on Jan. 27 may be 6 degrees Fahrenheit (minus 14 Celsius), 21 below normal, said AccuWeather Inc. in State College, Pennsylvania.

U.S. gas inventories dropped by 107 billion cubic feet to 2.423 trillion in the week ended Jan. 17, the Energy Information Administration reported yesterday. A median decline of 103 billion was forecast by analysts in a Bloomberg News survey.

Supplies have decreased 37 percent in the past 10 weeks, according to data from the Energy Department’s statistical arm. About 49 percent of U.S. households use gas for heating, with the largest users in the Midwest and the Northeast.

01/24/2014

 

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