US GAS: Futures End Slightly Higher Amid Mixed Weather Outlook
11/24/2009 02:44PM
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NEW YORK (Dow Jones)--Natural gas futures ended slightly higher Tuesday as the December contract expired, driven by mixed weather forecasts for late November and early December.
Natural gas for December delivery on the New York Mercantile Exchange settled 1.3 cents higher, or 0.29%, at $4.486 a million British thermal units after reaching a high of $4.61/MMBtu earlier in the day. The January contract, which was more actively traded, closed 2.5 cents lower, or 0.52%, at $4.766/MMBtu.
Traders were closely tracking weather forecasts for signs of below-normal temperatures that could spark greater demand for natural gas for heating. Gas inventories have reached record levels because of weak demand during the economic downturn and mostly mild temperatures in the U.S. Midwest and Northeast over the past few weeks.
"Gas could probably go back down to $4," said Stephen Schork, the president of Schork Group Inc, a Villanova, Pa., energy advisory firm. "If the bulls don't see any sort of [cold] weather in the next month, it needs to get really cold in the first quarter to support prices."
MDA EarthSat, a Rockville, Md., private forecaster, was predicting above-normal temperatures this week and next week in the Northeast and parts of the Upper Midwest, but below-normal temperatures from Dec. 4 to Dec. 8 across the central U.S. The National Weather Service, meanwhile, was forecasting below-normal temperatures throughout most of the continental U.S. east of Nevada from Nov. 29 to Dec. 7.
"Weather may ... be starting to contribute a positive influence as some forecasters are calling for a cold December," wrote Mike Fitzpatrick, a broker with MF Global in New York, in a note to clients Tuesday.
Meanwhile, analysts and traders expect government data scheduled for release Wednesday to show yet another build in gas inventories, bringing supplies to fresh record high. The U.S. Energy Information Administration is expected to report that 5 billion cubic feet of gas were added to storage during the week ended Nov. 20, according to the average prediction of 19 analysts and traders in a Dow Jones Newswires survey.
During the same week last year, the EIA reported a draw from storage of 55 bcf. On average, 21 bcf of gas were pulled from storage in the same week over the past five years.
If the storage estimate is correct, inventories as of Nov. 20 will total a new all-time record high of 3.838 trillion cubic feet, 13.1% above the five-year average and 11.9% above last year's level.
-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com