Investing.com - U.S. natural gas futures surged 5% to hit a three-week high on Friday, as updated weather forecasting models for the next two weeks turned colder. Forecasts for the period originally pointed to mild temperatures.
Bullish speculators are betting on the cold weather to increase winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
On the New York Mercantile Exchange, natural gas for delivery in March hit an intraday peak of $2.315 per million British thermal units, the most since January 13, before closing the week at $2.298, up 11.6 cents, or 5.32%.
For the week, natural gas futures rallied 14.2 cents, or 7.43%, as winter cold and shrinking inventories buoyed prices.
On Thursday, natural gas futures tacked on 2.5 cents, or 1.16%, after data showed natural gas supplies in storage in the U.S. fell by the most since February 2015 last week, as freezing weather conditions boosted demand.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. fell by 211 billion cubic feet, compared to expectations for a decline of 207 billion.
That compared with draws of 178 billion cubic feet in the prior week, 112 billion cubic feet in the same week last year and a five-year average of 174 billion.
Total U.S. natural gas storage stood at 3.086 trillion cubic feet, 17.2% higher than levels at this time a year ago and 14.0% above the five-year average for this time of year.
The EIA's next storage report slated for release on Thursday, February 4 is expected to show a withdrawal of approximately 200 billion cubic feet for the week ending January 29.
That compared with a decline of 115 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 178 billion cubic feet.
Elsewhere on the Nymex, crude oil for March delivery settled at $33.62 a barrel by close of trade on Friday, up $1.43, or 4.25%, on the week, while heating oil for March delivery jumped 5.97% on the week to settle at $1.055 per gallon.