U.S. Gas: Futures Rise


"Nat gas futures climb on bargain buying after falling to 13-month lows."

Natural gas futures climbed Tuesday on bargain buying after falling to 13-month lows.

Natural gas for November delivery rose 8.3 cents, or 2.5%, to $3.400 a million British thermal units on the New York Mercantile Exchange. The benchmark contract has settled lower for three consecutive days, setting 13-month lows. Futures have posted losses in 10 of the last 12 weeks, and prices have been supported at times after setting new lows as industrial users buy at bargain prices.

Futures were also supported Tuesday as traders who had made bets that gas prices would fall bought back those positions ahead of the November contract's expiration. The contract's last trading day is Wednesday.

Market participants have spent recent weeks weighing whether a seasonal rally is imminent, or if high supplies and downward momentum would push the market to new lows. Futures typically rise in anticipation of winter's heating demand, but high supplies and temperate weather have stifled attempts at a seasonal rally so far.

While traders were likely taking the opportunity Tuesday to square their books ahead of the benchmark contract's expiration, that doesn't necessarily signal a new upward trend in prices, said Julio Sera, a broker with Hencorp Futures. Analysts say the market's momentum still leaves open the possibility of new lows.

"There's no real case for an established bottom here," Sera said.

Forecasters are expecting a colder-than-normal December for the major gas-consuming areas in the northern U.S., which could lead to large drawdowns in gas inventories prove very supportive for prices.

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