NEW YORK–Natural-gas futures soared Thursday after weekly inventory data showed that stockpiles fell more than expected last week.
Natural-gas inventories shrank by 117 billion cubic feet in the week ended Jan. 1, the U.S. Energy Information Administration said Thursday. Analysts and traders surveyed by The Wall Street Journal had expected the agency to report a 100-bcf withdrawal.
Futures for February delivery extended gains on the news and recently rose 15.1 cents, or 6.7%, to $2.418 a million British thermal unit on the New York Mercantile Exchange, on track for the highest settlement since October.
“Finally we got a real winter scenario,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. “That had been something that was not showing up.”
Inventories remain 15% above five-year average levels for this time of year.
Moderate weather-driven demand and robust production has pushed the natural-gas market into oversupply in recent months. Stockpiles usually start drawing in early winter as more consumers use natural gas for indoor heating, but mild temperatures this winter meant that inventories kept growing until late November.
However, frigid temperatures appeared across much of the U.S. last week, driving stronger demand.
Storage withdrawals could near 200 bcf a week in the next two weeks due to continued cold weather, said Kyle Cooper, an analyst at IAF Advisors in Houston.
“We are entering the historically coldest time of year,” Mr. Cooper said. “We still have high relative inventory levels to deal with, but the underlying balance is actually quite bullish.”