US GAS: Futures End Higher On Bargain Hunting, Weather Outlook
11/05/2009 02:47PM
Bookmark
Subscribe
HOUSTON (Dow Jones)--Natural gas futures ended slightly higher, following the release of federal storage data, amid bargain hunting and expectations for mild weather.
Natural gas for December delivery on the New York Mercantile Exchange settled 5.7 cents, or 1.21%, higher at $4.782 a million British thermal units. The front-month contract rose as high as 4.882/MMBtu after the U.S. Energy Information Administration reported natural gas in storage grew by 29 billion cubic feet, slightly less than analysts had expected.
Natural gas prices have faced pressure from swelling storage levels, which now stand at an all-time high. Those lower prices were providing some encouragement for traders looking to buy gas ahead of winter heating demand.
"I think there are ongoing attempts to guess at a market bottom. There is bargain hunting here," Tim Evans, an analyst with Citi Futures Perspective in New York, said. Evans notes that natural gas prices are trading well below the five-year average price for this week of $8.276/MMBtu.
Natural gas in U.S. storage for the week ended Oct. 30 stood at a record 3.788 trillion cubic feet - 11% higher than last year and 12% above the five-year average, the EIA said Thursday.
At the same time, weather forecasts were calling for mild temperatures, which could prolong the storage injection season well into November.
"The expectation over the next couple of weeks is for warmer than normal temperatures and that does not bode well for heating demand," said Lisa Zembrodt, a commodity analyst with Summit Energy in Louisville, Ky.
The National Weather Service forecast Nov. 12-18 calls for above-normal temperatures across parts of the Midwest and in the Northeast. Mild temperatures there can stifle demand for natural gas to heat homes and businesses.
Market participants were also monitoring Tropical Storm Ida, which lost hurricane status after making landfall in Nicaragua. Some weather models show the storm tracking into the Gulf of Mexico. However, forecasters see the storm as unlikely to pose a threat to energy infrastructure there.
"If the storm decides to move north or into the production area, very hostile conditions will envelop the storm," Jim Rouiller, senior energy meteorologist for the private forecasting firm Planalytics, said.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com