Natural gas rose before a government report expected to show U.S. inventories of the heating fuel dropped last week by almost twice the five-year average amid winter storms.
Futures for March delivery advanced as much as 7.1 percent to $5.385 per million British thermal units in electronic trading on the New York Mercantile Exchange and were at $5.344 at 12:12 p.m. London time, leading gains in the S&P GSCI gauge of 24 raw materials. The contract fell 34.5 cents, or 6.4 percent, to settle at $5.03 yesterday. The volume of all futures traded was about 54 percent above the 100-day average. Prices are up 27 percent so far in 2014.
An Energy Information Administration report today may show stockpiles slid 273 billion cubic feet last week, compared with a five-year average decrease of 151 billion, according to the median of 19 analyst estimates compiled by Bloomberg.
Gas inventories totaled 2.193 trillion cubic feet as of Jan. 24, 16.6 percent below the five-year average and down 23 percent from the same week last year.
The second winter storm of the week swept into the U.S. Northeast yesterday, and another system is forecast to pummel the region in about three days. Four inches (10 centimeters) of snow fell in New York’s Central Park, topped by a quarter-inch of ice, according to the National Weather Service. More than 12 inches were reported in the city’s northern suburbs.
Credit Suisse Group AG raised its first-quarter gas price forecast by 50 cents to $4.80, the bank said in a research note today. The full-year estimate was raised by 13 percent to $4.30, according to the note.
“Risks to further price blow-outs appear most likely in the Midwest, where inventories are at nine-year lows, utilizing just 40 percent of availably capacity,” the bank said.
A storm out of the Rockies is expected to reach the East Coast by Feb. 9, and it may be the worst of the week, AccuWeather Inc. said.
“The snow this weekend could affect major hubs in the East, such as New York City, Philadelphia,Washington and Boston, into Monday’s morning commute,” Alex Sosnowski, expert senior meteorologist, saidon the company’s website.
About 49 percent of U.S. households use gas for heating, according to the EIA, the Energy Department’s statistical arm.