Jan. 22 (Bloomberg) -- Natural gas rose for a second day in New York as colder weather forecast to envelop the Midwest next week will boost demand for the heating fuel.
Below-normal temperatures from Canada will slide over Minnesota, Wisconsin and Illinois and parts of the Northeast by Jan. 27, according to MDA Federal Inc.’s EarthSat Energy Weather. About 72 percent of households in the Midwest rely on natural gas for heat.
“This is mainly a weather move,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois-based consultant. “The forecasts have shifted to some cool spots here and there. If you really want to talk about natural gas having a flashpoint in the country, it’s Chicago and Illinois.”
Natural gas for February delivery rose 14.6 cents, or 2.6 percent, to $5.761 per million British thermal units at 9:49 a.m. on the New York Mercantile Exchange. The contract gained 2.2 percent yesterday.
Gas inventories fell 245 billion cubic feet last week, more than double the average drop, to 2.607 trillion cubic feet, an Energy Department report showed yesterday. Stockpiles compared with the five-year average slipped into a deficit after being at a 4.4 percent surplus in the previous report.
“There’s going to be some serious arctic air coming down to the U.S. by next Wednesday,” said Peter Linder, president of the DeltaOne Energy Fund in Calgary.
Residential and commercial gas consumption, which includes schools, hospitals, shopping malls and warehouses, represents about 34 percent of U.S. gas demand.
Gas Supplies
Stockpiles of gas in storage began the cold-weather season in November at a record 3.837 trillion cubic feet, 15 percent above the five-year average, as higher production swamped a depressed market. The worst recession since the 1930s cut gas purchases by factories, chemical plants and steel mills by 9.8 percent last year through October, Energy Department data show.
“We’re below the five-year average and I expect by the end of January to be quite a bit below the average,” Linder said. “It’s quite positive for gas.”
Futures prices will break through $6 within the next week to 10 days, trading between $6.05 and $6.25, Linder said. In a Nov. 16 interview with Bloomberg, Linder predicted gas would reach between $5.50 and $6 in December and January on lower temperatures. Gas was trading at $4.614 at the time.
To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net
This article was originally posted here.