Gas futures push above $3/MMBtu
-- Gains come with northeast cold snap, cool weather in 11-15 day forecast
-- Futures recently up 2.7 cents to $3.020/MMBtu
By Jerry A. DiColo
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Natural gas futures prices rose Wednesday as a blast of cold weather in the U.S. northeast and forecasts for colder temperatures later this month signalled a likely increase in gas-fired heating demand.
Natural gas for February delivery recently gained 2.7 cents to trade at $3.020 a million British thermal units on the New York Mercantile Exchange.
Futures posted gains early Wednesday as cold temperatures descended from the Midwest to New York. While forecasts are calling for milder weather over the weekend, Commodity Weather Group said Wednesday that late next week cold weather will return across the Midwest, East and South, with low temperatures lingering on the East Coast into the 11-15 day outlook.
The forecaster said developing weather patterns "are helping to keep cold air in the mix."
Still, traders remain cautious about any increase in gas futures, particularly as they hang near the key $3 level. High production and inventories that are well above average continue to weigh on gas. Weekly data from the U.S. Energy Department shows gas-storage is 9.1% higher than a year ago and 14% above the five-year average for this time of year.
"Unless we get a sustained four-to-six weeks of bitterly cold winter temperatures, starting almost immediately, we are going to be looking at steady stock builds," said Peter Beutel, head of trading advisor Cameron Hanover, in a client note.
Front-month futures are near the lowest level since September 2009, while prices in January are at their lowest since 2002.
"The significance of the $3 mark is that it is both a psychological level, and it is near the marginal cost of production," said Drew Wozniak, analyst at ICAP Energy. He said trading around this level is likely to stay "choppy."
Meanwhile, natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.9675/MMBtu, according to IntercontinentalExchange, up from $2.9654/MMBtu Tuesday.