U.S. natural gas futures rose sharply on Monday, reaching a more than two-week high as forecasts showing slightly cooler weather on the way boosted the fuel.
U.S. natural gas for April delivery rallied 9.1 cents, or around 3.2% to $2.918 per million British thermal units by 8:45AM ET (13:45GMT). Futures touched a session high of $2.946 earlier, the most since February 16.
Sentiment in the gas market improved after forecasts over the weekend showed a return to cool weather after a warm spell in key gas-consuming regions in the U.S.
Weather forecasts for the next 8-to-15 days showed that rain, snow, and cool temperatures will track across the northern and eastern U.S., boosting demand expectations for the heating fuel.
Meanwhile, market participants looked ahead to weekly storage data due on Thursday, which is expected to show a draw in a range between 53 and 64 billion cubic feet in the week ended March 3.
That compares with a build of 7 billion cubic feet in the preceding week, a decline of 57 billion a year earlier and a five-year average drop of 136 billion cubic feet.
Total natural gas in storage currently stands at 2.363 trillion cubic feet, according to the U.S. Energy Information Administration, 7.3% lower than levels at this time a year ago and 12.5% above the five-year average for this time of year.
Prices of the heating fuel are down around 22% so far this year as forecasts for warm winter weather weighed on heating demand expectations.
Based on data from the National Oceanographic and Atmospheric Administration, this year’s extremely warm winter has pushed heating demand for natural gas to nearly 20% below average.
About half of U.S. homes use natural gas for heating.
Without significant demand for natural gas, inventories could stay near record levels and may even continue to pull prices even lower.
