Natural-Gas Futures Rise on Forecasts for Colder-Than-Normal U.S. Weather
Nov. 25 (Bloomberg) -- Natural gas traded in New York rose for the third consecutive session as below-normal temperatures spur demand for heating fuels from Chicago to New York.
Temperatures in Chicago will drop 14 degrees Fahrenheit below normal next Monday before milder weather eases heating demand late next week, AccuWeather Inc. said. Traders also bought contracts to close positions before the four-day Thanksgiving holiday weekend, when trading will be closed and forecasts could change.
``All it takes is a pretty good cold blast'' to spark a rally, said Mark Jacobs, a gas-marketer at Montana Dakota Utilities in Rapid City, South Dakota.
Gas for January delivery rose 12 cents, or 2.4 percent, to $5.05 per million British thermal units on the New York Mercantile Exchange. January is the peak demand month for U.S. residential-gas demand, according to Energy Department figures.
The January contract was poised to gain after the 12- and 26- day moving averages rose above a so-called signal line based on the nine-day moving average around 8:30 a.m., according to the intraday moving average convergence divergence indicator, or MACD, a technical trading tool.
The December contract, which expired at the end of today's floor session, rose 17.8 cents, or 3.8 percent, to $4.86.
Gas futures are up 19 percent from a year ago, touching a record $11.899 per million Btu reached in late February, when harsh weather stoked demand from the Gulf Coast to the Atlantic seaboard.
Weekend Forecasts
Weather forecasts released after trading closes for the week can dictate the direction prices move when electronic trading begins at 7 p.m. on Sundays.
Gas futures plunged 6.8 percent on Monday, Nov. 17, the largest decline in a month, after meteorologists revised forecasts over the preceding weekend to call for milder temperatures in the central and eastern U.S. The drop wiped out a 6.6 percent rally from the previous Friday.
Utilities, manufacturers and other co-called commercial traders are betting prices will rise, according to Commodity Futures Trading Commission data.
Commercial long positions, or futures bought, outnumbered shorts by an average of 24,704 contracts over the past two weeks, the largest net-long position since early February 2002, which marked the beginning of a six-week, 59 percent rally in gas prices.
Commodity funds, hedge-fund managers and other large speculators are betting in the opposite direction, commission data showed.
Short Positions
Speculative shorts, or futures sold, outnumbered longs by 52,684 contracts as of Nov. 18, the largest net-short position since Feb. 5, 2002, according to the CFTC. Speculative net shorts dropped 87 percent during the following six weeks as prices climbed, indicating speculators funded the rally as they closed positions.
The speculative net-short position ``continues to trap a large amount of potential energy,'' SG Corporate and Investment Banking analyst Wolfgang Bergman said in a note to clients. Speculative traders are ``poised to magnify any upward move with short covering.''
Energy companies, brokers and manufacturers had 3.155 trillion cubic feet of gas in storage as of Nov. 14, up 3.5 percent from the five-year average, according to the Energy Department. Utilities and factory operators stow fuel from April through October for use during the coldest months, when demand peaks.
Inventory Forecast
Inventories were probably unchanged last week, according to the average estimate of 19 analysts in a Bloomberg survey. Eight of the 19 analysts are forecasting a gain in stored supplies after warmer-than-normal weather crimped demand.
Temperatures in the east-north central and mid-Atlantic regions, which include eight of the top 10 residential-gas consuming states, were 38 percent and 25 percent above normal last week, respectively, according to the National Oceanic and Atmospheric Administration in Washington.
Inventories have declined during the third week of November in seven of the past eight years, according to Energy Department figures. The only time they gained during that period was in 2001, when utilities stowed 30 billion cubic feet of gas and prices tumbled 19 percent in four sessions.
The Energy Department's weekly storage estimate will be released tomorrow between noon and 12:10 p.m. Washington time, a day earlier than usual because the federal government will be closed Thursday for Thanksgiving.
Last Updated: November 25, 2003 15:36 EST
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Now that's more like it! Luvin' seeing that January contract start with a "5". |
