Natural Gas Surges 35% as Warm Weather Leaves Forecasts


Weather forecasts have repeatedly shown more cold coming to start January

Natural gas prices are soaring again Tuesday as the extremely warm temperatures that sapped demand this month are leaving weather forecasts for early January.

Futures for January delivery recently traded up 13.9 cents, or 6.2%, at $2.367 per million British thermal units on the New York Mercantile Exchange. The market is on pace for a fourth session in the last six with gains larger than 5%.

Natural-gas futures have gained 35% in less than seven trading days since they settled at a 16-year-low on Dec. 17. Tuesday’s gains put gas at its highest point since Nov. 19.

“It took two months but winter is finally here and natural gas futures are moving along with them,” Aaron Calder, analyst at Gelber & Associates

Weather forecasts have repeatedly shown more cold coming to start January. Tuesday’s weather update from Commodity Weather Group LLC in Bethesda, Md., shows no above-normal temperatures across the nation by Jan. 8, adjusting from Monday’s forecast, which still showed some lingering warm weather over nearly the entire East Coast.

Forecasts already show extreme cold in the west for this week and some of that gradually moving east. Many U.S. homes use natural gas for heat, making the winter weather the biggest driver for gas prices.

“People are jumping in on this because they see all the weather out West,” said John Woods, president of JJ Woods Associates and a Nymex trader. “We were too deep into the season to have such depressed prices and discount an entire winter.”

Physical gas for next-day delivery at the Henry Hub in Louisiana last traded at $2.36/mmBtu, compared with Monday’s range of $2.00 to $2.13. Cash prices at the Transco Z6 hub in New York last traded at $1.95/mmBtu, compared with Monday’s range of $1.86 to $2.45.

Certain statements in this blog post may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release and other potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.

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