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Analysts expect Thursday's inventory report to show 122 Bcf was withdrawn from storage last week, based on a Dow Jones Newswires survey of 13 analysts and traders, lower than the previous week's 157 Bcf.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