NEW YORK (Dow Jones)--Natural gas futures climbed Wednesday on a cold-weather outlook for major gas-heating markets and anticipation of a large weekly decline in gas stockpiles.
Natural gas for February delivery recently traded 4.3 cents higher, or 1%, at $4.468 a million British thermal units on the New York Mercantile Exchange.
Wednesday's forecasts for the next two weeks came in slightly colder than previously expected across much of the eastern U.S., according to private forecaster MDA EarthSat. Colder-than-normal temperatures are seen stretching from Texas to the Northeast through the end of January, likely boosting demand for the heating fuel.
Futures have traded in a narrow range this month between about $4.30/MMBtu and $4.70/MMBtu as market participants weighed weather forecasts with inventories that are still widely seen as ample to meet winter's heating needs.
The gas market "continues to try to push through $4.50," but the oversupply "keeps bringing it right back down," said Gene McGillian, an analyst with Tradition Energy. If Thursday's storage report meets market expectations for a large draw, it "might be a catalyst to get a test of $4.70."
Analysts are expecting a weekly U.S. Energy Information Administration report scheduled for release Thursday to show a larger-than-average draw from stockpiles last week as frigid weather lifted heating demand. Many market participants are forecasting a draw of more than 200 billion cubic feet from U.S. inventories for the week ended Jan. 14, well above the five-year average decline of 133 bcf.
The EIA's report is scheduled for release Thursday at 10:30 a.m. EST.
Inventories as of Jan. 7 stood at 2.959 trillion cubic feet, the EIA said last week, about 5.8% above the five year average. That's down from nearly 10% above average in November, when inventories reached a record high.
The supply overhang has pressured the market for much of the last two years, capping gains even during winter's increase in gas-heating demand. Benchmark gas futures ended 2010 at the lowest year-end price since 2001.