Investing.com - Natural gas prices shot up on Tuesday after updated weather-forecasting models predicted cold Canadian air to make its way south in the lower 48 states in the coming days and drive demand for heating.
On the New York Mercantile Exchange, natural gas futures for delivery in December were up 3.40% at $3.761 per million British thermal units during U.S. trading. The commodity hit a session low of $3.623, and a high of $3.762.
The December contract settled down 1.65% on Monday to end at $3.637 per million British thermal units.
Natural gas futures were likely to find support at $3.622 per million British thermal units, Monday's low, and resistance at $3.842, the high from Oct. 20.
Mild autumn temperatures hovering over much of the eastern U.S. should soon give room to chillier mercury readings and drive demand for heating, which should prompt thermal power plants to burn more natural gas to meet demand.
"We thought the weather system coming out of northern Canada late this week with below freezing temperatures and light snowfall could support prices, which it looks like now could be happening. Of course, it's impossible to determine exactly what causes price moves, but the fact that national weather forecasts continue trending colder with widespread subfreezing temperatures for this weekend, while also starting to advertise the first snowfall, can't hurt," Natgasweather.com reported in its Tuesday midday update, adding it was tracking two cold fronts.
"This first front will only cool temperatures to around 5-10F below normal, but the weekend one will be more impressive as temperatures drop 10-20F colder than normal with many cities from Chicago to Boston dipping below freezing," Natgasweather.com reported.
"This will result in much stronger heating demand for the Midwest, Northeast, and Mid-Atlantic, which will affect the third build down the line after the next two come in much larger than normal."
Meanwhile, the U.S. Energy Information Administration's next storage report slated for release on Thursday is expected to show an increase of 85 billion cubic feet for the week ending Oct. 24.
Inventories rose by 45 billion cubic feet in the same week a year earlier, while the five-year average change is a build of 59 billion cubic feet.
Natural gas storage in the U.S. rose by 94 billion cubic feet last week.
Injections of gas into storage have surpassed the five-year average for 27 consecutive weeks, alleviating concerns over tightening supplies.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in December were up 0.56% at $81.46 a barrel, while heating oil for December delivery were up 0.77% at $2.4819 per gallon.