Natural gas prices rallied on Monday after forecasters predicted colder weather in the coming weeks.
Natural gas for January delivery on the New York Mercantile Exchange settled floor trade 31 cents, or 5.32%, higher at $6.136 a million British thermal units.
Tim Evans an analyst with Citi Futures Perspective in New York, said the
weather outlook was contradicting earlier forecasts for a
warmer-than-normal January.
"It
looks like it is going to be cold," Evans said. "That's what the
weather forecasts are telling us, and that's what the natural gas price
is telling us."
The
National Weather Service forecast for Jan. 3 to Jan. 7 calls for
above-normal temperatures across the Northeast and mid-Atlantic and
near-normal conditions in the Midwest. However, those temperatures are
expected to turn colder.
The
NWS expects colder-than-normal temperatures to stretch east -- from
parts of California and across the Midwest into the Northeast,
according to the agency's 8- to 14-day outlook.
Analysts
said those temperatures will likely spur demand for heating and help
draw down natural gas storage levels, which are currently at
above-average levels. Natural gas in U.S. storage for the week ended
Dec. 19 stood at 3.020 trillion cubic feet - 3.4% above the five-year
average.
Matt
Rogers, a meteorologist with the private forecasting firm MDA EarthSat
Weather, said the weather models are showing colder temperatures next
week.
"Starting around the middle of next week we should start seeing sub-zero temperatures in the Midwest and the Plains," he said.
