Investing.com - U.S. natural gas futures soared to a more than seven-week high on Monday, as updated weather forecasting models pointed to a burst of chillier-than-normal weather across most parts of the U.S. in the coming days.
Natural gas for delivery in May on the New York Mercantile Exchange rose by more than 5% to an intraday peak of $2.074 per million British thermal units, a level not seen since February 12, before trading at $2.046 by 14:20GMT, or 10:20AM ET, up 9.0 cents, or 4.6%.
Midwestern and Northeastern temperatures are expected to fall below normal in the first week in April amid a late season cold front, while a fast warm-up in the west is expected to drive cooling demand.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting outlooks on late-winter heating demand.
Gas use typically hits a seasonal low with spring's mild temperatures, before warmer weather increases demand for gas-fired electricity generation to power air conditioning.
The heating season from November through March is the peak demand period for U.S. gas consumption. However, a warmer-than-normal winter due to the El Niño weather pattern has limited the amount of heating days and reduced demand for the fuel.
Total U.S. natural gas storage stood at 2.468 trillion cubic feet as of last week, according to the U.S. Energy Information Administration, 40.6% higher than levels at this time a year ago and 34.2% above the five-year average for this time of year.
Some market experts worry that stockpiles at the end of March will hit at an all-time high of around 2.5 trillion cubic feet, topping the end-of-withdrawal-season high of 2.472 set at the end of March in 2012.
Natural gas futures are down nearly 10% so far this year as weak winter heating demand, near-record production and record-high storage levels dragged down prices.
Elsewhere on the Nymex, crude oil for delivery in May inched up 7 cents, or 0.19%, to trade at $36.86 a barrel, while heating oil for May delivery dipped 0.02% to trade at $1.130 per gallon.