Natural gas futures - weekly outlook: February 23 - 27

Investing.com - U.S. natural gas futures rallied more than 4% on Friday to hit a four-week high, as forecasts for freezing weather across large parts of the U.S. boosted expectations for much higher heating demand.

On the New York Mercantile Exchange, natural gas for delivery in March surged 11.7 cents, or 4.13%, on Friday to settle at $2.951 per million British thermal units by close of trade. Earlier in the day, prices hit $2.984, the most since January 22.

Futures were likely to find support at $2.772 per million British thermal units, the low from February 19, and resistance at $3.009, the high from January 22.

For the week, Nymex natural gas prices climbed 13.3 cents, or 5.24%, the second consecutive weekly gain.

Updated weather forecasting models showed a polar blast extending into early March, with severely cold weather covering most of the country.

Temperatures in the key Northeast and Midwest regions were expected to be below normal through March 6. About 49% of U.S. households use gas for heating.

Bullish speculators are betting on the frigid weather boosting winter demand for the heating fuel.

The heating season from November through March is the peak demand period for U.S. gas consumption.

On Thursday, natural gas closed up 0.3 cents, or 0.11%, despite government data showing mild consumption of gas for heating last week.

The U.S. Energy Information Administration said in its weekly report that natural gas storage fell by 111 billion cubic feet.

The five-year average change for the week was a decline of 180 billion cubic feet, while supplies fell by a whopping 247 billion the same time last year.

Total U.S. natural gas storage stood at 2.157 trillion cubic feet, 2.8% above 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.

Despite recent gains, natural gas prices are likely to remain vulnerable amid speculation supplies are more than ample to meet demand.

Futures are down almost 35% since mid-November as an unusually mild start to winter limited demand while production soared.

Elsewhere on the Nymex, crude oil for April delivery settled at $50.81 a barrel by close of trade on Friday, down $2.69, or 5.33%, on the week.

Meanwhile, heating oil for March delivery rallied 7.12% on the week to settle at $2.111 per gallon by close of trade Friday.