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Record Natural-Gas Need Keeps Bulls Betting on Advances: Energy


31/03/2014 07:27 AST Bloomberg

The cold snap in the Eastern U.S. convinced hedge funds and other speculators to keep betting on rising natural gas prices, accumulating the most bullish position for this time of year since at least 2010.

The polar vortex that sent temperatures tumbling across the country in January boosted consumption by households and power plants to all-time highs. Waves of frigid weather through March pushed stockpiles to the lowest level in 11 years.

Almost 3 trillion cubic feet of gas will need to go into storage during the warm-weather months to cover winter demand, something that’s never been done before. Bank of America Corp. and BNP Paribas SA say stockpiles may rise to less than 3.5 trillion cubic feet by the end of October, about 300 billion short of last year’s high. It will take the record production forecast for this year to get there, said Francisco Blanch, commodities research head at Bank of America in New York.

“We’re going to be in a tight situation,” Blanch said. “It will be pretty hard to build inventories to 3.5 trillion cubic feet by the end of the summer season.”

Net-long wagers on four U.S. natural gas contracts rose 0.1 percent to 409,266 in the week ended March 25, according to U.S. Commodity Futures Trading Commission data released March 28. That’s the most in data starting in 2010 and three times the average for this time of year over that period.

Natural gas futures rose 5.1 percent this year on the New York Mercantile Exchange. They fell 1 percent during the CFTC report week and dropped as much as 1 percent in today’s electronic trading after settling at $4.485 per million British thermal units on March 28.

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