Natural gas rose to its highest price in almost four months

Natural gas rose to its highest price in almost four months after weather forecasts showed a colder than normal in the U.S., boosting demand for heating oil.

Oil advanced as much as 3.5 percent after the National Weather Service cut its temperature forecasts for the eastern states in December 1911 to December 15. Gas prices were trading at the lowest level since 2002 in early December.

"Cold weather is the main driver of gas prices," said Brad Flowers, a trader at Kottke Associates Inc., an energy trading company in Louisville, Kentucky. "It seems that below-normal temperatures will be hanging in most of the month, and this is suffocating and the lifting of the sale of gas from the bottom."

Natural gas for January delivery gained 13.7 cents, or 3.2 percent, to $ 4,486 per million British thermal units at 10:36 am in the New York Mercantile Exchange after climbing to $ 4,503, the price highest intraday since 09 August. Gas has risen 7.3 percent since late November.

Temperatures will be well below normal this week and next in the East and Midwest next week, according to Time Commodity Group LLC in Bethesda, Maryland.

New York will have a minimum of 29 degrees Fahrenheit (minus 2 degrees Celsius) on December 8, 5 degrees below average, according to AccuWeather Inc. in State College, Pennsylvania. Chicago will have a minimum of 12 degrees, 13 degrees below normal.

About 52 percent of U.S. households the use of natural gas for heating, according to the Department of Energy.

Gas Supplies

"The weather is colder than expected," said Kyle Cooper, director of research at IAF Advisors in Houston. "Many people had expectations of a warm December."

gas inventories fell 23 billion cubic feet in the week ended on Nov. 26 to 3,814,000,000,000 cubic feet, the Energy Department reported last week.

The drop in stocks was smaller than the average five-year retirement for the week of 36 billion cubic feet, the data show department. A surplus with the average of five years rose to 10 percent from 9.5 percent the previous week.

"The level of storage is still very high, but this is a market driven for a while," said Cooper.