Natural gas rose for a seventh consecutive day on Wednesday, the longest stretch of gains since January 2011, as weather forecasting models continued to point to below-average temperatures in densely-populated U.S. consuming areas, boosting the power-station fuels demand prospects.
On the New York Mercantile Exchange, natural gas for delivery in December traded at $3.644 per million British thermal units at 12:10 GMT, up 0.73% on the day. Prices shifted in a days range between $3.618 and $3.651 per mBtu, near Tuesdays 1-1/2-week high. The energy source rose by 1.9% yesterday and was up 2.4% on weekly basis on Wednesday.
Natural gas extended gains as weather forecasts continued to call for colder-than-normal weather in key U.S. consuming areas. According to MDA Weather Services in Gaithersburg, Maryland, readings in the eastern U.S. will be lower than usual through November 16, after which the cold wave will spread over the Midwest through November 21, bringing below-average readings in the region.
According to AccuWeather Inc., readings in Chicago on November 19 may bottom at 20 degrees Fahrenheit, 13 below usual, while the low in Minneapolis may be 13 degrees Fahrenheit, 12 below normal.
When cold weather is expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of U.S. electricity generation. Consumption usually picks up from November through March. According to the Energy Information Administration, power generation accounts for 32% of U.S. gas demand and 49% of U.S. households use the energy source for heating.
Market players will be also keeping a close watch on EIA’s weekly natural gas storage report, due at 14:30 GMT on Thursday. Early injection estimates for last week’s build range between 16 billion and 36 billion cubic feet, compared to the five-year average increase of 19 billion cubic feet and last year’s 12 billion gain during the comparable week.
The energy source advanced last week and extended gains after the Energy Information Administration reported on Thursday that U.S. natural gas inventories added 35 billion cubic feet in the week ended November 1, compared to the five-year average gain of 36 billion cubic feet and last year’s 27 billion increase during the comparable period. Total gas held in underground U.S. storage hubs rose to 3.814 trillion cubic feet, 2.9% lower than last year’s amount of 3.926 trillion. The surplus over the five-year average stockpiles narrowed by 0.1% to 1.5% from a week earlier, the report showed.
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