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Media_can_spin_it_HUh! Natural Gas Rises on Signs of Strong Demand
Prices settle 5% higher
By TIMOTHY PUKO
Updated Dec. 23, 2015 3:11 p.m. ET
http://www.wsj.com/articles/natural-gas-in-holding-pattern-on-mixed-weather-forecasts-1450886076
Natural gas prices surged throughout the afternoon on signs that stronger demand and the first spell of wintry weather could be on the way for the East Coast.

Prices for the front-month January contract settled up 9.5 cents, or 5%, at $1.983 a million British thermal units on the New York Mercantile Exchange, the highest settlement since Dec. 11. Gas set a new inflation adjusted low for its history of Nymex trading on Thursday, but gained ground now in three of four sessions since, up 13% during that span.

Colder weather forecasts have been pushing bearish traders out of the market, analysts and traders have said. Weather forecasts were already showing patches of cold spread over the Rockies and Texas at the start of this week, and Wednesday afternoon’s updates also showed colder-than-normal weather spread to the East Coast between Georgia and Pennsylvania two weeks out, according to WeatherBELL Analytics LLC.

About half of U.S. homes use natural gas for heat, making winter weather the big driver in the natural gas market. WeatherBELL is predicting blizzards with snow and ice over Texas and some of the first winter weather to hit the East Coast after a spate of extreme warmth--including forecasts of nearly 70-degree highs in New York on Christmas Eve--has delayed the start of winter until January.

That warm December and limited heating demand caused stockpiles to drain by just 25 billion cubic feet last week, according to The Wall Street Journal’s survey of analysts and traders. That is just a fifth of their typical drawdown for that week of the year. The U.S. Energy Information Administration releases its weekly update on natural gas stockpiles at 10:30 a.m. EST on Thursday.

But even that small drain is still likely a bullish sign to some traders, said Kyle Cooper, managing director of research at IAF Advisors, a Houston consulting firm. With weather as warm as it has been, in many other years there would have actually been an addition to stockpiles, he said.

“Considering the temperatures, that’s a pretty healthy drop,” Mr. Cooper said. “The underlying supply-demand balance is pretty decent.”

Write to Timothy Puko at [e-mail]