U.S. natural gas futures jumped to a three-week high on Monday, after meteorologists predicted colder-than-normal temperatures in much of the U.S. in the week ahead.
Natural gas for delivery in December on the New York Mercantile Exchange rallied 4.3 cents, or 1.82%, to trade at $2.404 per million British thermal units during U.S. morning hours. It earlier rose to $2.460, the highest since October 21.
On Friday, natural gas prices surged 10.1 cents, or 4.47%, as a smaller-than-expected storage injection and colder forecasts boosted prices.
The U.S. Energy Information Administration said Friday natural gas supplies in storage rose by 49 billion cubic feet last week, below expectations for an increase of 51 billion.
That compared with builds of 52 billion cubic feet in the prior week, 40 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 30 billion cubic feet.
Total U.S. natural gas storage stood at an all-time high of 3.978 trillion cubic feet, almost 10% higher than levels at this time a year ago and 4.5% above the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for all of last winter’s unusually strong demand.
Meanwhile, updated weather forecasting models released Friday afternoon showed cooler temperatures than previously forecast for the next two weeks in the U.S. Midwest and Southeast, which should boost early-winter heating demand for the fuel.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on early-winter heating demand.
The heating season from November through March is the peak demand period for U.S. gas consumption.
Elsewhere on the Nymex, crude oil for delivery in December tacked on 29 cents, or 0.72%, to trade at $41.03 a barrel, while heating oil for December delivery dipped 0.01% to trade at $1.380 per gallon.