BLOOMBERG

Natural Gas Tops Commodity Gains as Traders Brace for Cold Month

 

By Isis Almeida - Dec 15, 2014


Natural gas climbed the most in almost two weeks as traders braced for a colder end of the
month than previously forecast.


Futures rose as much as 3.7 percent, the most since Dec. 2, making the fuel the best performer
among 22 raw materials in the Bloomberg Commodity Index. Colder-than-normal temperatures
are expected for the upper Midwest by Dec. 26, for Texas by Dec. 27 and the east coast by Dec.
28, forecaster Commodity Weather Group LLC in Bethesda, Maryland, said in an e-mailed
report.


“The market is reacting to new forecasts pointing to a colder end to December,” Moses
Rahnama, an analyst at London-based consultants Energy Aspects Ltd., said by e-mail today.
“We don’t know how cold it will get, but definitely colder than previously forecast. Models are
also pointing to possibly a colder January.”


Natural gas for next month gained to as high as $3.936 per million British thermal units on the
New York Mercantile Exchange before trading at $3.889 per million Btu by 6:17 a.m. in New
York. The volume of all futures traded was 160 percent above the 100-day average for the time
of day.


“Although we expect trading to remain volatile over the coming weeks, we regard the current
price level of $3.80 to $4.00 per million Btu as too low for the winter season, i.e. as a buying
opportunity.” Tiberius Asset Management said in a report e-mailed today.


The low temperature in New York will be 25 degrees Fahrenheit (-3.9 Celsius) on Dec. 26, 4
degrees below the historical average, with snow showers expected the next day, according to
AccuWeather Inc.


“Some models are delivering accumulating snowfall to the big east coast cities that could offer
some lingering colder impacts into early next week before the bigger upstream colder pattern
changes take hold,” CWG said in its report.


An estimated 49 percent of U.S. households use gas for heating, according to the Energy
Information Administration, the Energy Department’s statistical arm.


To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net
To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Rob
Verdonck, Andrew Reierson
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FUTURES AND OPTIONS TRADING INVOLVE SIGNIFICANT RISK OF LOSS AND
MAY NOT BE SUITABLE FOR EVERYONE. OPTIONS, CASH AND FUTURES
MARKETS ARE SEPARATE AND DISTINCT AND DO NOT NECESSARILY
RESPOND IN THE SAME WAY TO SIMILAR MARKETS STIMULUS. A MOVEMENT
IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE
RELATED FUTURES & OPTIONS CONTRACT BEING OFFERED. SEASONAL
DEMAND AND CURRENT NEWS IN COMMODITIES ARE ALREADY REFLECTED
IN THE PRICE OF THE UNDERLYING FUTURES.