Bitter Cold Keeps Heating Natural Gas ETFs | ETF Trends

Americans may think it’s cold now, but the current wintry weather may be a preview of an even colder arctic blast ahead, fueling a surge in natural gas prices and exchange traded funds.

Matt Rogers, president of Commodity Weather Group LLC., forecasts temperatures across the eastern U.S. and parts of Ontario and Quebec will be eight degrees below average ending Jan. 27, and it will be even worse next week, reports Brian K. Sullivan for Bloomberg.

“The crazy thing is that the current cold snap this week looks to be a bit more modest in the face of next week’s outbreak,” Rogers said in the article. “The cold coming for the end of January is sufficient to make this the coldest month of the century so far and the coldest the Lower 48 has felt in at least 20 years.”

Demand for natural gas will likely increase for heating purposes as the cold front moves south. [Natural Gas ETFs Look Toasty During Artic Blast]

Rogers calculates that natural gas-weight heating degree days value for January could hit 1,062.9, compared to the five-year average of 949.5.

Natural gas futures rose 1.7%, trading around $4.77 per million British thermal units, after the U.S. Energy Information Administration revealed that natural gas supplies dipped 107 billion cubic feet for the week ended Jan. 17, reports Myra P. Saefong for MarketWatch. Stocks are 369 bcf below the five-year average.

“The storage number was pretty much in line with expectations, but there’s a strong buy in the market right now,” Kent Bayazitoglu, an analyst at Gelber & Associates, said in a Bloomberg article. “There’s ongoing cold in the forecasts and we could see very large withdrawals next week and the week after.”