Oct. 25 (Bloomberg) -- Natural gas futures climbed the most in more than two weeks in New York as meteorologists predicted colder-than-normal weather that would spur demand for the heating fuel.
Gas rose 2.1 percent, the biggest one-day gain since Oct. 8, as MDA Weather Services in Gaithersburg, Maryland, said temperatures would be below normal in the eastern U.S. and Midwest through Oct. 29. The low in New York on Oct. 27 may be 44 degrees Fahrenheit (7 Celsius), 3 less than average, according to AccuWeather Inc. in State College, Pennsylvania.
“It’s pretty cold out there,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “The heating demand we’re seeing means the bulls are winning the battle right now.”
Natural gas for November delivery rose 7.8 cents to settle at $3.707 per million British thermal units on the New York Mercantile Exchange. Trading volume was 26 percent below the 100-day average at 2:37 p.m. Prices have climbed 11 percent this year and dropped 1.5 percent this week.
The discount of November to December futures narrowed 0.9 cent to 10.5 cents. November gas traded 17.9 cents below the January contract, compared with 19.6 cents yesterday.
November $3.80 calls were the most active options in electronic trading. They were 0.7 cent higher at 1.1 cents per million Btu on volume of 1,712 at 3:10 p.m. Calls accounted for 60 percent of trading volume. Implied volatility for December at-the-money options was 31.15 percent at 3 p.m., compared with 31.34 percent yesterday.
The low in Cleveland on Oct. 27 may be 37 degrees Fahrenheit, 9 below normal, AccuWeather data show. About 49 percent of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical arm.
The U.S. may have 1.3 percent more heating-degree days, a measure of weather-driven energy demand, from November to March than a year earlier, Commodity Weather Group said in a Sept. 23 seasonal outlook.
The number of rigs drilling for natural gas in the U.S. rose by four to 376, according to data released today by Baker Hughes Inc. in Houston. The total is down 13 percent this year.
An EIA report yesterday showed stockpiles rose by more than the five-year average amid mild weather. Supplies climbed 87 billion cubic feet in the seven days ended Oct. 18 to 3.741 trillion, up from the five-year average gain of 67 billion.
A surplus to the five-year average widened to 2.1 percent from 1.6 percent the previous week. Supplies were 2.4 percent below year-earlier inventories, compared with 3.1 percent in the prior report.
“While the stronger-than-expected growth of inventories reverberated with bearish sentiment through the market, we believe prices are near the bottom of their range at current levels,” Biliana Pehlivanova, an analyst at Barclays Plc in New York, said in a note to clients today.
Gas prices below $3.50 per million Btu would increase consumption by power plants, Pehlivanova said.
The U.S. met 87 percent of its own energy needs in the first six months of 2013, on pace to be the highest annual rate since 1986, according to the EIA.
--With assistance from Naureen S. Malik in New York. Editors: Bill Banker, Charlotte Porter