Investing.com - Natural gas futures were up for a second day on Tuesday, moving further off last week’s three-month low as forecasts showing colder-than-normal temperatures in late December boosted sentiment on the heating fuel.
On the New York Mercantile Exchange, natural gas futures for delivery in January traded at USD3.436 per million British thermal units during U.S. morning trade, jumping 2.3%.
It earlier rose by as much as 2.65% to trade at a session high of USD3.450 per million British thermal units, the strongest level since December 11. The January contract tumbled to a three-month low of USD3.263 per million British thermal units on December 14.
Updated weather forecasts released earlier showed that cold weather was expected across key parts of the U.S. during the last week of December, boosting sentiment on the heating fuel.
The Commodity Weather Group said that temperatures across most of the lower 48 states will be colder-than-usual from December 27 through December 31.
The weather group added that "much colder" temperatures were expected to descend across the U.S. Midwest, with cold spreading to the Northeast by the end of the 10- to 15-day forecast.
Forecasts originally called for above-average weather during the period.
Bullish speculators are betting on the colder weather increasing winter demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
The heating fuel has lost nearly 14% since touching a 14-month high of USD4.001 per million British thermal units on November 26, after forecasters said December temperatures should be warmer-than-normal.
Meanwhile, investors remained concerned over bloated U.S. inventory levels. The U.S. Energy Information Administration said last week that natural gas storage in the U.S. rose by 2 billion cubic feet to a total of 3.806 trillion cubic feet.
Stocks are 1% higher than last year at this time and 8% above the five-year average for this time of year.
Early withdrawal estimates for this Thursday’s storage data range from 53 billion cubic feet to 81 billion cubic feet. Inventories fell by 100 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 144 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February climbed 0.55% to trade at USD88.16 a barrel, while heating oil for January delivery rallied 1.05% to trade at USD2.987 per gallon.