Natural Gas Gains on Outlook for Colder Weather, Weaker Dollar

By Reg Curren

Dec. 15 (Bloomberg) -- Natural gas futures gained for the first day in three on a forecast for colder weather across most of the U.S., where more than half of all households rely on the fuel for heating.

Below-normal temperatures will persist from now until Dec. 24 in parts of the Midwest, including Minneapolis, where lows may dip to minus 15 Fahrenheit (minus 26 Celsius) by tomorrow, according to MDA Federal Inc.’s EarthSat Energy Weather. Gas also rose as a weaker dollar lifted commodity prices.

“The weather maps are starting to look more bullish,” said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, New Hampshire. “And the weaker dollar means the fear factor is coming out of the market, which is bullish for commodities and natural gas.”

Gas for January delivery rose 25.7 cents, or 4.7 percent, to $5.745 per million British thermal units at 9:29 a.m. on the New York Mercantile Exchange. Gas futures are down 23 percent this year and have dropped 12 percent this month on mild weather and slow industrial demand.

The dollar declined to its lowest in eight weeks against the euro amid speculation the Federal Reserve will cut borrowing costs to an all-time low.

The weaker dollar makes commodities, including crude, gold and wheat more attractive to investors outside the U.S.

An expected production cut this week by the Organization of Petroleum Exporting Countries is also propping up crude prices.

Oil for January delivery rose $2.90, or 6.3 percent, to $49.18 a barrel on the New York exchange.

To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net.