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Nymex Natural Gas Rises to 8-Week High on Buying for Winter

By Geoffrey Smith

Oct. 20 (Bloomberg) -- Natural gas rose to an eight-week high on expectations that cold weather this winter will boost demand for the furnace fuel and cut down a glut of gas in inventories.

Forecaster AccuWeather Inc. has said winter will be colder than government meteorologists are predicting, especially across the eastern U.S. Early season cold the past couple of weeks in the central part of the country has stoked fears that colder- than-average weather may carry into winter.

``If you get even an average winter, you can blow through inventories pretty quickly,'' said Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina. ``We might have seen the bottom'' in prices, he said.

Gas for November delivery climbed 10.9 cents, or 1.5 percent, to $7.241 per million British thermal units on the New York Mercantile Exchange. The price jumped 28 percent this week, vying for the biggest weekly surge since futures trading began in 1990. Prices soared 29 percent in the weeks ended Dec. 8, 2000, and Oct. 26, 1990.

U.S. weather was 17 percent cooler than normal in the week ended Oct. 14, according to population-weighted data from the National Oceanic and Atmospheric Administration. The Northern Plains, a region that includes the Dakotas, Nebraska, Kansas, Missouri, Iowa and Minnesota, had weather that was 54 percent cooler than the norm, the government data showed.

The trend in gas prices is up, according to analysis from Guy Gleichmann, president of United Strategic Investors Group in Hollywood, Florida. The seasonal pattern is for prices to rally into the start of winter, he said.

``You have a shift in sentiment where people are starting to lean to the long side,'' Gleichmann said. ``This surplus can get eradicated very quickly.''

Gas will gravitate toward $7.80 before sellers step in to reverse the trend, he said. ``Next resistance is $7.80, which November may make a run at'' next week, Gleichmann said.

To contact the reporter on this story: Geoffrey Smith in New York at [email protected] .

Last Updated: October 20, 2006 14:57 EDT

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