Dec. 11 (Bloomberg) -- Natural gas advanced for a third day in New York, reaching a six-month high, on speculation that frigid weather will lead to bigger-than-normal declines in stockpiles of the heating fuel.
Gas gained as much as 1.1 percent as a midday update to the National Weather Service’s Global Forecast System model showed a wider swath of below-normal temperatures in the contiguous U.S. through Dec. 25. A government report tomorrow may show that inventories fell by 84 billion cubic feet last week, compared with the five-year average decrease of 76 billion for the period, according to the median of 12 analyst estimates compiled by Bloomberg.
“January is usually the month with the most heating demand, but we’re already seeing significant withdrawals from gas storage early in the season,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “Investors are seeing this as an opportunity to take some long positions.”
Natural gas for January delivery rose 4.1 cents, or 1 percent, to $4.278 per million British thermal units at 12:07 p.m. on the New York Mercantile Exchange. Trading volume was 74 percent above the 100-day average. Prices are up 28 percent this year. The futures climbed to $4.292, the highest intraday price since May 28.
The premium of January to February futures narrowed 0.4 cent to 0.2 cent. March gas traded 10.8 cents above the April contract, compared with 7.6 cents yesterday.
January $3.90 puts were the most active options in electronic trading. They were 0.4 cent lower at 0.9 cent per million Btu on volume of 896 at 12:21 p.m. Puts accounted for 47 percent of trading volume.
The low in New York on Dec. 17 may be 30 degrees Fahrenheit (minus 1 Celsius), 2 below average, according to AccuWeather Inc. in State College, Pennsylvania. Temperatures in Minneapolis may slip to minus 1 degree, 13 lower than usual.
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 inventory change in last week’s report was the biggest November decline in records going back to 1994.
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.
--Editors: Bill Banker, Richard Stubbe