NEW YORK Jan 28 U.S. natural gas futures for
February were up on Tuesday as forecasts for the coming days
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.
The front-month February natural gas futures contract on the
New York Mercantile Exchange was up 9.5 cents, or 1.96
percent, to $4.942 per million British thermal units at 10:05
a.m. EST (15:05GMT).
On Monday, the contract reached $5.442 per mmBtu, its
highest level since February 2010, before ending the day down
more than 6 percent.
The front-month, which expires on Wednesday, is up about 13
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, were heard at $5.25, down 44 cents from Monday, when
prices reached their highest level since 2010. Early trade
differentials were done at a 31-cent premium over the NYMEX
Sabine Pipeline announced Tuesday morning that it would
begin repairs on the South Booster Station at the Henry Hub,
reducing compression capabilities by 40 percent. The company
could not say whether the repairs would affect overall capacity
or how long they would take.
Gas on New York's Transco Zone 6 pipeline
had not yet traded early Tuesday.
Storage withdrawals for the bitterly cold week ended Jan. 24
are expected to be within 220 billion to 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
Monday, 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.