Investing.com - Natural gas futures soared on Wednesday on expectations that a powerful winter storm dumping snow along the eastern U.S. will increase heating use in the country''s businesses and homes and send thermal power plants burning more of the commodity to meet demand.
On the New York Mercantile Exchange, natural gas futures for delivery in February traded at USD4.683 per million British thermal units during U.S. trading, up 5.68%. The commodity hit session high of USD4.695 and a low of USD4.434.
The February contract settled up 2.43% on Tuesday to end at USD4.431 per million British thermal units.
Natural gas futures were likely to find support at USD4.434 per million British thermal units, the earlier low, and resistance at USD4.782, the high from June 10, 2011.
A fresh blast of winter weather that brought heavy snowfall across the eastern U.S. left much-below-normal temperatures in its wake on Wednesday.
Updated weather forecasting models predicted chilly mercury readings to stick around through the end of January, which sent prices soaring.
U.S. supply levels also remained in focus. Natural gas supplies dropped by a record-high 287 billion cubic feet last week to 2.530 trillion cubic feet, approximately 15% below the five-year average for this time of year.
The previous record drop was a decrease of 285 billion cubic feet in the seven days ended December 13, Energy Information Administration data show.
Natural gas inventories have fallen by 1.3 trillion cubic feet, or 34%, since November 8 as frigid winter temperatures in the U.S. led households to burn a higher than normal amount of the fuel in furnaces to heat their homes.
Some market analysts expect supplies at the end of the winter heating season in March to be at their lowest in six years.
Wall Street investment bank Goldman Sachs lowered its forecast for inventory levels at the end of March to 1.39 trillion cubic feet, driven by the recent “polar vortex.”
Goldman had previously estimated U.S. gas inventories at 1.61 trillion by the end of March.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March were up 1.96% and trading at USD96.83 a barrel, while heating oil for February delivery were up 0.75% and trading at USD3.0372 per gallon.