Dec. 10 (Bloomberg) -- Natural gas climbed for a second day in New York as storms brought snow and below-normal temperatures to the East Coast.
Gas rose 0.1 percent to the highest price in more than six months as the weather system triggered National Weather Service advisories from Tennessee to Massachusetts and dropped about 2.5 inches (6.4 centimeters) of snow in New York’s Bronx borough.
“The market continues to advance on the back of strong seasonal demand,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re seeing significant gains with the cold weather forecasts.”
Natural gas for January delivery rose 0.5 cent to $4.237 per million British thermal units on the New York Mercantile Exchange. Trading volume was 83 percent above the 100-day average at 3:05 p.m. The futures are up 26 percent this year.
The premium of January to February futures narrowed 0.1 cent to 0.6 cent. March gas traded 7.6 cents above the April contract, compared with 7.8 cents yesterday.
February $4.50 calls were the most active options in electronic trading. They were 0.5 cent lower at 10.5 cents per million Btu on volume of 4,418 at 3:34 p.m. Calls accounted for 66 percent of trading volume.
The low in New York today may be 24 degrees Fahrenheit (minus 4 Celsius), 10 less than usual, according to AccuWeather Inc. The temperature may drop to 21 degrees tomorrow. Readings in Boston may fall to 20 tomorrow, 10 below average.
MDA Weather Services in Gaithersburg, Maryland, predicted colder-than-normal weather in most of the lower-48 states through Dec. 14.
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 3.4 percent more heating-degree days, a measure of weather-driven energy demand, from November to March compared with the same period last year, Commodity Weather Group LLC in Bethesda, Maryland, said in a Nov. 25 seasonal outlook.
Gas stockpiles were 2.8 percent below the five-year average and 5.2 percent less than last year’s supplies for the seven days ended Nov. 29, EIA data show. The week’s inventory change was the biggest November decline in records going back to 1994. Supplies in this week’s report, due Dec. 12, may drop 85 billion cubic feet, according to the median of seven analyst estimates compiled by Bloomberg. The five-year average decline for the week is 76 billion.
Gross gas production in the lower-48 states slid 0.8 percent in September to 73.91 billion cubic feet a day from a revised 74.49 billion the previous month, the EIA said Dec. 6 in its monthly EIA-914 report. Output fell as a gas plant shut in Wyoming and producers in Louisiana reported maintenance and “normal well declines,” the agency said.
A discount of Northeast gas prices to the benchmark Henry Hub in Louisiana may persist as production from the Marcellus shale formation accelerates, Jan Stuart, head of energy research at Credit Suisse Group AG in New York, said in a note to clients today. Supply growth from the formation will average about 5.3 billion cubic feet a day over the next three years, Stuart said.
“We think that Northeast discounts will need to widen more, to more than $1, and for a few years yet, to open up access to the future demand growth hubs in the south,” he said.
--Editors: Bill Banker, Richard Stubbe