Natural Gas edges up amid forecasts for cooler temps, eyes supplies

Natural gas futures extended Tuesday's gains into Wednesday, as weather forecasting services continued to issue calls for colder-than-normal temperatures to return for much of the nation. On the New York Mercantile Exchange, natural gas futures for delivery in March traded at USD3.280 per million British thermal units, up 0.26%. The commodity hit a session low of USD3.259 and a high of USD3.313. Weather forecasting services originally calling for seasonable temperatures began to forecast cooler-than-normal thermometer readings for much of the U.S., which sparked a rally in natural gas markets on Tuesday, with prices shooting up 3.8%. Industry weather group MDA Federal said it expected a "chilly, unsettled pattern" with below-normal temperatures settling in for much of the nation in its one to five-day outlook. Natural gas futures are very sensitive to weather reports in the U.S. winter. The U.S. heating season, which runs from November through March, sees peak demand for gas. About half of U.S. households use gas for heating purposes, according to Energy Department data. Market participants, meanwhile, looked ahead to a U.S. government report on natural gas supplies due for release on Thursday. Early withdrawal estimates range from 118 billion cubic feet to 154 billion cubic feet. Inventories fell by 155 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 140 billion cubic feet. Total U.S. natural gas storage stood at 2.527 trillion cubic feet as of last week, 16% above the five-year average for this time of year. If withdrawals for the rest of winter season match the five-year average pace, inventories will end the heating season at 2.076 trillion cubic feet, nearly 20% above normal, but 16% below last year's end-winter record of 2.48 trillion cubic feet. Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April were down 1.97% and trading at USD95.19 a barrel, while heating oil for March delivery were down 0.93% and trading at USD3.1509 per gallon.

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