NEW YORK--Natural gas futures prices rose Monday as cooler weather is expected to result in a drop in U.S. gas stockpiles later this week.
Analysts and traders are predicting Energy Department data due Thursday will show a withdrawal of gas from U.S. inventories, the first decline of the winter-heating season. Private forecasters are also calling for colder weather over the next week than they previously predicted.
"The weather demand is starting to increase, we'll see a withdrawal this week for sure," said Matt Smith, an analyst at Summit Energy. "That may have spurred a bit of buying."
Natural gas for December delivery on the New York Mercantile Exchange settled 6.7 cents, or 1.9%, higher, at $3.57 a million British thermal units, after dropping as low as $3.470/MMBtu early in the session.
Monday's gains made up for losses Friday and kept gas futures in the tight trading range just above $3.50/MMBtu that has held for most of November.
Futures were spurred by forecasts that said cool temperatures will descend on the U.S. this week. Commodity Weather Group Inc. said "a fast-moving cold push" will bring colder weather than previously forecast across most of the middle of the U.s., while milder weather predicted over the next two weeks was consistent with earlier forecasts.
Prices also received a boost after Goldman Sachs Group Inc. (GS) on Monday raised its natural gas price forecast for 2013 to $4.25/MMBtu, up from $4/MMBtu.
The bank's analysts said drillers are cutting production due to low prices and this year's winter weather will return to normal after mild temperatures last year.
"Prices can continue to recover," Goldman analysts said in a research note.
Gas prices are holding above $3.50/MMBtu after tumbling from 11-month highs near $3.70/MMBtu in late October. After prices rallied from decade lows in April, investors remain cautious about how this year's winter weather will influence gas-fired heating demand.
Natural-gas usage surges in the winter as homes and businesses burn the fuel for heat. But last year, mild weather and surging production left the market flush with gas heading into the summer, resulting in the sharp price drop.
U.S. gas stockpiles are just 6.6% above average, according to Energy Department data last week. In March, stockpiles were roughly 60% above average. But until winter weather kicks in, some analysts are recommending that investors stay on the sidelines
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