Forexpros – Natural gas prices rose for the first time in three days on Tuesday, as forecasts for colder-than-normal winter weather in the U.S. next week boosted demand expectations for the heating fuel.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD3.171 per million British thermal units during U.S. morning trade, jumping 1.05%.
It earlier rose by as much as 2.1% to trade at a two-day high of USD3.216 per million British thermal units. Prices fell to a 27-month low of USD3.050 on Monday, December 19.
With most investors already away on year-end leave, trading volumes were expected to remain low, resulting in volatile trade.
Sentiment on the heating fuel improved after the Commodity Weather Group said earlier that cold temperatures could hit the U.S. East Coast over the next six-to-10-days.
However, prices trimmed gains after industry weather group MDA Federal offered a different outlook, saying the Northeast and mid-Atlantic regions will remain 3 to 4 degrees above normal through the first week of January.
Natural gas prices have closely tracked weather forecasts in recent weeks. Below-normal winter temperatures increase the need for gas-fired electricity to heat homes, boosting demand for natural gas.
Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.
Lingering concerns that U.S. natural gas inventories were ample to meet the needs of even an unusually cold winter also limited gains.
Total U.S. natural gas storage stood at 3.629 trillion cubic feet as of last week, 11.9% above the five-year average for this time of year.
The January natural gas contract has lost nearly 15% since the beginning of December, trading close to a 27-month low in recent sessions, as record high storage levels in the U.S. and forecasts of warm December weather drove down prices.
Gas futures typically climb during the winter months, as temperatures fall and demand for heating fueled by natural gas rises. But mild weather coupled with high production levels have kept prices depressed in recent weeks.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February rose 0.65% to trade at USD100.50 a barrel, while heating oil for February delivery added 0.25% to trade at USD2.915 per gallon.
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