Natural Gas Gains in Survey as Cold Front Boosts Heating Use

Feb 07, 2014 4:48 pm ET

(Updates with prices in the fifth paragraph.)

Feb. 7 (Bloomberg) -- Natural gas futures will advance next week as winter storms pushing across the U.S. boost demand for the heating fuel, according to a Bloomberg survey.

Five of 11 analysts, or 45 percent, said prices rise on the New York Mercantile Exchange through Feb. 14. Four, or 36 percent, said gas will fall and two said prices will stay the same. Last week, 50 percent said futures would decline.

A strong core of cold air will keep temperatures below normal from the U.S. Pacific Northwest to central and eastern states through Feb. 15, according to MDA Weather Services in Gaithersburg, Maryland. Gas stockpiles fell to 1.923 trillion cubic feet at the end of January, the lowest level for the month since 2004, according to preliminary data from the U.S. Energy Information Administration.

“We expect that futures prices will likely move higher as the market better aligns with very tight physical conditions,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. The market is currently viewing dips below $5 “as a buying opportunity,” given the weather forecasts, she said.

Natural gas for next-month delivery fell 16.8 cents, or 3.4 percent, to $4.775 per million British thermal units this week on the Nymex, capping the fifth decline in the past seven weeks. Futures are up 13 percent this year.

The low temperature in Chicago on Feb. 10 will drop to 1 degree Fahrenheit (minus 17 Celsius), 19 below normal, while Manhattan’s reading will drop to 11 lower than average at 17 degrees, according to AccuWeather in State College, Pennsylvania. About 49 percent of U.S. households use gas for heating, U.S. Energy Information Administration data show.

The gas survey has correctly forecast the direction of prices 51 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

5 4 2

--Editors: Bill Banker, David Marino