Natural Gas advances in New York on outlook for cooler weather

Natural gas futures rose in New York on speculation that cooler weather will boost demand, limiting gains in stockpiles of the power-plant fuel.

The East Coast and Midwest may see cooler-than-normal weather April 4 through April 6, according to MDA Weather Services of Gaithersburg, Maryland.

“We could see some upcoming injections disappoint,” said John Kilduff, partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “These temperatures are going to be below normal in April, which could drive demand.”

Natural gas for May delivery advanced 0.5 cent, or 0.2 %, to settle at US$2.644 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 56 % below the 100-day average at 2:55 p.m. Prices are down 8.5 % this year.

May US$2.35 puts were the most active gas options in electronic trading, falling 0.8 cent to 1.9 cents on volume of 824 contracts at 2:57 p.m. May $2.65 calls dropped 0.4 cent to 11.3 cents on volume of 469.

A government report April 2 may show that gas inventories fell 8 billion cubic feet in the seven days ended March 27, according to the median of three analyst estimates compiled by Bloomberg. The five-year average change for the week is a decline of 22 billion. Supplies dropped 71 billion the same week last year.

Stockpiles rose 12 billion cubic feet the week ended March 20, the first increase since the heating season began in November.

Natural gas stockpiles in April will see gains below the five-year average as “lingering weather demand next month will likely limit the initial injections,” Teri Viswanath, director of commodity strategy at BNP Paribas SA in New York, said in a note to clients.

The high in New York on April 6 may be 50 degrees Fahrenheit (10 Celsius), 8 below normal, according to AccuWeather Inc. About half of U.S. households use natural gas for heating. – Bloomberg