Natural-gas futures rose Thursday after weekly data showed a big slump in U.S. gas inventories that signalled rising demand.
The U.S. Energy Information Administration said domestic gas
stockpiles fell by 201 billion cubic feet in the week ended Jan. 4. The
decline was greater than analysts' average forecast calling for a
185-bcf decline and deeper still than the 132-bcf five-year average
decline for the week.
The storage withdrawal was the largest in nearly two years,
and lowered total U.S. stockpiles to 3.316 trillion cubic feet, 2.6%
below last year and 11% above the five-year average for the week.
"It's definitely a bullish number...We had the coldest week of
the season, and the holidays didn't put much of a dent in consumption,"
said Kent Bayazitoglu, an energy analyst at Gelber and Associates in
Houston.
Natural gas for February delivery was recently ahead 8.6
cents, or 2.7%, at $3.199 a million British thermal units on the New
York Mercantile Exchange.
The report arrived amid a sharp decline in natural-gas prices
to near three-month lows as mild winter weather limits demand for
gas-fired heating by homes and businesses.
Roughly half of U.S. homes use natural gas for heat, and many
more use electric heating generated by gas-fired utilities. When
temperatures are milder than normal, natural-gas demand typically
slumps.
Despite a drop in temperatures last week, forecasters are
expecting warmer weather across the U.S. East Coast for the next few
days, continuing a pattern that has mostly persisted since November.
"The direction of Nat Gas prices are primarily dependent on
the actual and forecasted weather pattern now that we are in the heart
of the winter heating season," Dominick Chirichella, an analyst at the
Energy Management Institute, wrote in a note to clients. "Currently
those forecasts are bearish."
Still, some investors and analysts say that the recent drop in
prices may have raised demand from gas-fired utilities looking to take
advantage of the cheaper fuel.
"It may be signalling that there is some additional demand coming in as prices fall close to $3," said Mr. Bayazitoglu.