By John Kell
NEW YORK–Natural-gas futures climbed to a four-week high as traders focused on forecasts calling for another late-season cold snap and fretted about a potentially disappointing storage report due Thursday.
Natural gas for May delivery settled up 5.2 cents, or 1.2%, at $4.5860 a million British thermal units, the highest since March 11, on the New York Mercantile Exchange.
Lower-than-average temperatures in the U.S. are expected to persist over the next week or two, supporting the need for gas to heat homes.
Market observers appear divided over the ability of producers to replenish stockpiles that were depleted during the recent harsh winter. Energy-advisory firm Gelber & Associates said traders are “trying to make sense of tomorrow’s storage report, expected to be the first injection of the season.”
A survey of 20 analysts by The Wall Street Journal predicted the report would show 13.75 billion cubic feet of natural gas were added to storage last week.
The Energy Information Administration said Tuesday that it expects natural-gas supplies to be at 3.422 trillion cubic feet by the end of October, a nine-year low. The five-year average for the last week of October is 3.832 trillion cubic feet.
“We need to do an incredible job to get storage anywhere close to where it needs to be at the end of the refill season,” said Phil Flynn, an analyst at brokerage Price Futures Group. “We have never produced this much natural gas ever.”
Some have expressed concern that gas prices remain too low to persuade producers to pump enough gas this spring and summer to refill storage. Meanwhile, a hot summer could ramp up demand for natural gas from power plants that use the fuel to generate the electricity needed to run air-conditioning units.
Gelber & Associates said while average injections won’t push natural-gas prices to $5 per million British thermal units, “the longer the market goes without seeing bearish drivers revealed in the storage reports, the more of a premium for natural gas.”