Investing.com - U.S. natural gas prices rallied sharply on Wednesday, as a blast of frigid winter weather was expected to boost near-term fuel demand.
According to weather forecasting models, the Eastern half of the U.S. was expected to see heavy snow and freezing temperatures through March 7, in what was expected to be the last major system of the winter.
At least 30 states were under winter weather alerts on Wednesday, affecting nearly 120 million Americans.
Bullish speculators are betting that colder weather will increase demand for the heating fuel. Approximately 49% of U.S. households use natural gas for heating, according to the Energy Department.
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 April jumped 5.9 cents, or 2.19%, to trade at $2.772 per million British thermal units during U.S. morning hours, after hitting an intraday high of $2.783.
Futures were likely to find support at $2.641 per million British thermal units, the low from March 3, and resistance at $2.888, the high from February 26.
A day earlier, natural gas for delivery in April touched $2.641, the weakest level since February 10, before turning higher to end at $2.712, up 1.4 cents, or 0.52%,
Meanwhile, market participants looked ahead to fresh weekly information on U.S. gas inventories to gauge the strength of demand for the heating fuel.
The Energy Information Administration's storage report slated for release on Thursday is expected to show a withdrawal of approximately 220 billion cubic feet for the week ending February 27.
The five-year average change for the week is a decline of 116 billion cubic feet, while supplies fell by 189 billion the same time last year.
Total U.S. natural gas storage stood at 1.938 trillion cubic feet as of last week, 1.5% below the five-year average for this time of year.
Last spring, supplies were 55% below the five-year average, indicating producers have more than made up for last winter’s unusually strong demand.
Elsewhere on the Nymex, crude oil for delivery in April eased up 29 cents, or 0.57%, to trade at $50.81 a barrel, while heating oil for April delivery slumped 1.31% to trade at $1.914 per gallon.