Bloomberg News

Natural Gas May Rise on Outlook Colder Weather Late January

January 04, 2013

Natural gas futures may rise next week as forecasts for colder weather later this month signaled increased demand for the heating fuel.

Five of 10 analysts in a Bloomberg survey, or 50 percent, predicted that futures will advance on the New York Mercantile Exchange through Jan. 11. Four, or 40 percent, said gas will fall and one said prices will stay the same. Last week, 50 percent of participants said gas would drop this week.

Below-normal temperatures will return to the western U.S. over the next 11 to 15 days with more seasonal weather in the Midwest, according to MDA Weather Services in Gaithersburg, Maryland. Predictions for mild weather before then sent gas futures to a three-month low yesterday.

“The significant selloff that has taken place in the last three trading sessions suggests that a rebound might be in order next week with any cool-down in the weather forecasts,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “It would be premature to write off the entire winter heating season.”

Natural gas dropped 27.1 cents, or 7.8 percent, to $3.198 per million British thermal units this week through yesterday in New York, heading for the first weekly decline since mid- December. Gas is up 6.8 percent from a year ago. Prices have tumbled 19 percent from a one-year high on Nov. 23 as above- normal temperatures reduced fuel use.

Even with slightly warmer-than-anticipated weather so far this heating season, prices should find support well above $3, Viswanath said.

Price Cap

“However, re-emerging concerns of a supply surplus will likely keep prices under $3.50 in the very near-term,” she said.

Gas inventories probably fell by 130 billion cubic feet last week, based on the median of 16 analyst estimates compiled by Bloomberg. That would be above the five-year average decrease for the week of 111 billion and the year-earlier decline of 77 billion, Energy Department data show.

The department is scheduled to release its weekly report at 10:30 a.m. in Washington, delayed by a day because New Year’s.

Stockpiles totaled 3.652 trillion cubic feet in the week ended Dec. 21, 12.8 percent above the five-year average for the period, department data show. The surplus expanded from 4.6 percent at the end of November.

The gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

5 4 1

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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