Natural gas climbed for a fourth straight day Monday, closing at the highest price in almost four months on speculation that a cold start to spring will buoy demand for the heating fuel.
Gas prices rose as MDA Weather Services predicted that below-normal temperatures will linger in most of the lower 48 states through April 1. The futures have climbed 23 percent from a one-month low Feb. 15 as unusually cold weather helped reduce a stockpile glut."It doesn't look like this rally is done yet," said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Conn. "The next two weeks, they're calling for below-normal temperatures. In this push up to $4, we have basically seen a lot of shorts run out of the market."Gas for April delivery rose 1 cent to $3.88 per million British thermal units, the highest settlement price since Nov. 23. Prices earlier jumped to $3.96, the highest intraday price since Oct. 31, 2011. Gas futures, which have increased 16 percent this year, last traded at $4 in September 2011.But traders pared gains late in Monday's trading day on concern that at $4, a "more significant share" of electricity generators will start burning coal instead of gas, said Teri Viswanath, director of commodities strategy at BNP Paribas. This loss of power demand would reverse the progress made this winter in creating a storage deficit, she said."It appears that the persistent cold weather for the balance of the winter is insufficient to keep the summer curve supported above $4," Viswanath said.Still, hedge funds boosted bets on U.S. natural gas to the highest level on record amid forecasts of more cold March weather, according to the Commodity Futures Trading Commission's March 15 Commitments of Traders report."Colder-than-normal March temperatures mean the 2012/2013 winter will likely end up close to normal, despite the mild weather in December," Goldman Sachs analysts said in a note to clients.The low temperature in Chicago on March 20 may be 16 degrees Fahrenheit (minus 9 Celsius), 16 lower than the usual reading, according to AccuWeather Inc. New York's low on April 1 may be 31 degrees, 9 below normal.About 50 percent of U.S. households use gas for heating, according to the Energy Information Administration. Gas demand typically slumps between the peak heating-demand season and before hot weather drives power demand to run air conditioners.Have more to add? News tip? Tell us
