Investing.com – Natural gas futures rallied sharply on Tuesday, bouncing well off the prior session’s lows, on bets of cold weather to come in February, which should boost demand for the heating fuel.
Front-month U.S. jumped 8.0 cents, or around 2.5%, to $3.245 per million British thermal units (btu) by 8:30AM ET (1330GMT).
The commodity sank to as low as $3.038 on Monday as traders reacted to updated weather forecasting models which called for milder weather.
But fresh models released overnight show a wide swath of below-average temperatures encompassing the bulk of the central and eastern US through both the upcoming six- to 10-day and eight- to 14-day periods.
Natural gas prices typically rise during the winter months as colder weather sparks indoor-heating demand. The heating season from November through March is the peak demand period for U.S. gas consumption.
Meanwhile, market participants looked ahead to this week’s storage data due on Thursday, which is expected to show a draw in a range between 90 and 110 billion cubic feet (bcf) in the week ended Jan. 26.
That compares with a decline of 288 bcf in the preceding week, a fall of 87 bcf a year earlier and a five-year average drop of 160 bcf.
Total natural gas in storage currently stands at 2.296 trillion cubic feet (tcf), according to the U.S. Energy Information Administration. That figure is 519 bcf, or around 18.4%, lower than levels at this time a year ago and 486 bcf, or roughly 17.5%, below the five-year average for this time of year.
A recent blast of cold weather across parts of the U.S. over the past few weeks has resulted in unusually strong storage withdrawals for natural gas, bringing storage levels to the low end of a five-year range.
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