Natural Gas Nears Biggest Weekly Gain Since 2010 as Cold Returns

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Natural gas futures were near their biggest weekly gain in more than three years amid forecasts that cold weather will return to the U.S.

Futures for March delivery jumped as much as 3.8 percent to $6.294 per million British thermal units in today’s electronic trading on the New York Mercantile Exchange, for a weekly gain of 20 percent, the biggest since October 2010. They were up 2.8 percent at $6.236 at 11:39 a.m. London time. The volume of all futures traded was about 19 percent below the 100-day average.

The contract dropped 1.4 percent yesterday as a government report showed U.S. gas inventories declined less than analysts estimated. Still, prices this week topped $6 for the first time since 2010 on forecasts for a surge of cold air following unusually mild weather this week.

“Cold air is poised to return in stages to the North Central states, the Northeast and interior South beginning this weekend and continuing into next week,” Alex Sosnowski, a meteorologist at AccuWeather Inc. in State College, Pennsylvania, said today on the forecaster’s website.

Chicago’s low on Feb. 26 will drop to 2 degrees Fahrenheit (minus 17 Celsius), 23 below normal, while New York City will slide to 14 degrees on Feb. 27, 17 lower than average, according to AccuWeather. About 49 percent of U.S. households use gas for heating, led by the Midwest and the Northeast, data show from the Energy Information Administration, the Energy Department’s statistical arm.

U.S. Inventories

The EIA said in a report yesterday that gas stockpiles dropped 250 billion cubic feet in the week ended Feb. 14 to 1.443 trillion cubic feet. The median of 24 analyst estimates compiled by Bloomberg expected a decline of 257 billion.

The inventory report showed a decline that was bigger than the five-year average drop of 133 billion cubic feet. The gap compared with the five-year average widened to a record 34 percent from 27 percent in the previous week, yesterday’s report showed. Supplies were 40 percent below year-earlier inventories.

Citigroup Inc. boosted its 2014 natural gas price forecast to an average of $5 per million Btu from a November estimate of $3, the bank said today in an e-mailed report.

“A much colder-than-normal winter sharply drew down gas inventories, pushing the expected end-of-March storage below 1 trillion cubic feet, which was last seen in 2003, when March prices spiked to $9.50,” Citigroup analyst Anthony Yuen said.