December 28th, 2012

Natural gas futures gained in New York for the second time in three days on speculation that a cold start to January will drive up demand for the heating fuel.

Natural gas rose as much as 2.2 percent as forecasters including Commodity Weather Group LLC predicted below-normal temperatures for most of the lower 48 states over the next six to 10 days. An Energy Department report today may show supplies declined by 72 billion cubic feet last week, based on the median of 20 analyst estimates compiled by Bloomberg. The five-year average drop for the period is 140 billion, department data show.

“It is getting a little chilly,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “There is probably a little bit of short-covering ahead of today’s inventory report. It’s difficult to sell into the report going into the coldest part of the year, January and February.”

Natural gas futures for February delivery advanced 6.4 cents, or 1.9 percent, to $3.476 per million British thermal units at 9:39 a.m. on the New York Mercantile Exchange. Gas is up 16 percent this year, heading for the first annual gain since 2007. Futures trading volume was 39 percent below the 100-day average.

The Energy Department is scheduled to release its weekly gas storage report at 10:30 a.m. today in Washington, delayed by a day because of Christmas.

- Naureen S. Malik in New York at Bloomberg.