Natural Gas Rises as Central Banks Try to Stem Financial Crisis

By Mario Parker

Oct. 13 (Bloomberg) -- Natural gas in New York rebounded as governments in Europe, the U.S. and Asia took measures to support banks and restore confidence in economies across the world.

Natural gas, crude oil and other commodities advanced after the U.K. provided $64 billion of capital to its banks and the U.S. Federal Reserve said it will lend unlimited dollar funds to financial institutions.

``You're seeing rallies across the globe,'' said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. ``We're starting to see a more concentrated effort globally on the part of the banks.''

Natural gas for November delivery rose 17.4 cents, or 2.7 percent, to $6.709 per million British thermal units at 10:21 a.m. on the New York Mercantile Exchange. Futures have dropped 51 percent from a 30-month intraday high of $13.694 on July 2. The fuel plunged 11 percent last week.

``We were just really oversold last week and you're seeing a little bounce,'' said Larry Young, a senior trader at Infinity Futures Inc. in Chicago. ``We're up across the board in the entire complex.''


Crude oil for November delivery advanced $2.91, or 3.8 percent, to $80.61 a barrel in New York. Oil has fallen 45 percent since reaching a record $147.27 in July.

``We're getting some people that have been patiently waiting who are starting to get back into commodities,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``We may have seen the worst of the worst of this sell-off.''

Stocks Rally

Stocks rallied worldwide as the MSCI World Index rebounded from its worst week on record, and the euro rose the most in three weeks against the dollar after the banks worked to boost the financial system.

``The dollar's pretty weak,'' said Jarvis. ``The European situation looks better, so you're seeing the euro scream. Plus, you can throw into the mix that Morgan Stanley got a vote of confidence from the Japanese.''

Morgan Stanley climbed as much as 66 percent in New York trading after the firm sealed its $9 billion investment from Mitsubishi UFJ Financial Group Inc.

The Standard & Poor's 500 Index rose 4.4 percent to 938.35 as of 10:03 a.m. in New York. The index tumbled 18 percent last week and is down 36 percent this year.

As financial stocks rebound worldwide, commodities should follow, Jarvis said.

``Everyone's looking at equities as a beacon,'' he said.

Current natural gas prices are a bargain so close to the winter heating season, Neill said.

``Gas is cheap and a lot of end-users are interested at these levels,'' Neill said.

The cold-weather season runs from November to March when demand for natural gas outstrips production, requiring utilities and other large users to draw on supplies put into storage during the U.S. summer.

``If we get any type of winter supply could whittle,'' and prices could rise, Jarvis said.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net.