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Hedge funds are the most bullish on benchmark U.S. natural-gas futures since at least 2006 after a freeze drove prices for the heating fuel to a three-year high.
Speculators increased their net-long position, or wagers on rising prices, in New York Mercantile Exchange futures by 21 percent in the week ended Jan. 21, according to U.S. Commodity Futures Trading Commission data that begins in 2006.
A wider measure that includes three contracts tied to Henry Hub, the delivery point for Nymex futures, reached a one-month high.
Gas jumped above $5 per million British thermal units last week for the first time since June 2010 as forecasts showed arctic weather persisting through early February.
This month may be the coldest January since 1994 in the lower 48 states, according to Commodity Weather Group LLC. The amount of gas withdrawn from storage from Oct. 31 through Jan. 17 was the most for that period on record, government data show.
“Traders are reacting to the forecasts for extreme cold temperatures persisting for the rest of the month,” said Biliana Pehlivanova, head of global natural gas and LNG research at Barclays Plc in New York. “If this weather continues, we could see prices pushing even higher.”
Natural gas rose 6.2 cents, or 1.4 percent, to $4.431 per million British thermal units on the Nymex in the week covered by the report. Prices advanced 20 percent last week, the biggest gain since the seven days ended Oct. 29, 2010. The futures are up 45 percent since Oct. 31.
Gas slipped 1 percent on Jan. 15 on forecasts for milder weather that would limit demand. Prices advanced 1.3 percent to a three-week high the next day after a report from the Energy Information Administration, the Energy Department’s statistical arm, showed inventories tumbled by 287 billion cubic feet in the week ended Jan. 10 to 2.53 trillion, a record decline.
