NEW YORK Jan 28 U.S. natural gas futures for
February rose nearly 4 percent on Tuesday as forecasts for the
coming days turned colder.
Private forecaster MDA Weather Services revised its
six-to-10-day forecast to show colder-than-average temperatures
for all of the country except Florida. It had previously
expected warmer temperatures to spread from Texas to Maine.
Front-month futures have been extremely volatile over the
past week, gaining more than 10 percent on Friday and falling
more than 5 percent on Monday.
Implied volatility over the last 30 days reached 83 on
Friday, the highest since September 2009. On Monday, it fell to
69, still within levels not seen since 2009.
Price swings are likely to temper if weather forecasts
become more certain and moderate.
"Robust production levels of gas and uncertainty surrounding
the weather outlook for the second half of this winter should
provide growing resistance to rising gas prices, especially if
forecasts moderate in the coming weeks," said Addison Armstrong,
senior director of market research at Tradition Energy.
Front-month natural gas futures on the New York Mercantile
Exchange closed up 18.6 cents, or 3.84 percent, at
$5.033 per million British thermal units.
On Monday, the contract reached $5.442 per mmBtu, its
highest since February 2010.
The front-month, which expires on Wednesday, is up about 19
percent since the beginning of January.
In the ICE cash market, trades for gas for Wednesday
delivery at Henry Hub , the benchmark supply point in
Louisiana, closed at $5.23, down 46 cents from Monday, when
prices reached their highest since 2010. Late trade
differentials were done at a 20-cent premium over the NYMEX
Sabine Pipeline said Tuesday morning it would begin repairs
to the South Booster Station at the Henry Hub, reducing
compression capabilities by 40 percent. The company could not
say whether they would affect overall capacity or how long they
Gas on New York's Transco Zone 6 pipeline
closed down $61.06 to $30.20, as the region is forecast to
gradually warm up over the week.
In Chicago, gas for Wednesday delivery came off record highs
as weather is expected to warm up from Tuesday's sub-zero
temperatures. Trades on the Chicago Citygate pipeline slumped $34.74 to $6.57.
Storage withdrawals for the week ended Jan. 24 are expected
to be between 220 billion and 280 billion cubic feet, according
to analysts polled by Reuters. The U.S. Energy Information
Administration will release the data on Thursday.
Nuclear plant outages, which create a draw on natural gas as
a substitute power source, were at about 2,600 megawatts on
Tuesday, equal to those on Monday. That compares with 9,050 MW
out a year ago and a five-year average outage rate of 5,800 MW.