Investing.com - Natural gas prices jumped to a two-week high in a shortened trading day for the Christmas holiday on Thursday, after data showed U.S. natural gas supplies in storage fell more than expected last week.
On the New York Mercantile Exchange, natural gas for delivery in January surged 4.6 cents, or 2.32%, to close the week at $2.029 per million British thermal units. It earlier rose to $2.052, the most since December 10.
The U.S. Energy Information Administration said natural gas storage in the U.S. fell by 32 billion cubic feet last week, more than expectations for a decline of 25 billion.
That compared with a drawdown of 34 billion cubic feet in the prior week, 49 billion cubic feet in the same week last year, while the five-year average change for the week is a decline of 140 billion cubic feet.
Total U.S. natural gas storage stood at 3.814 trillion cubic feet, 14.7% higher than levels at this time a year ago and 10.8% above the five-year average for this time of year.
Prices received a further boost after updated weather forecasting models pointed to cooler temperatures across the central U.S. through the last week of December. Bullish speculators are betting on the cool winter weather to increase demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.
For the week, natural gas futures soared 26.2 cents, or 12.91%, as forecasts called for a return to cool weather, following a warm spell which took prices to the lowest level since March 1999 earlier this month. Prices fell to a 17-year low of $1.684 on December 18.
Natural gas typically rises ahead of the winter as colder weather sparks heating demand, yet an unusually mild start to winter due to the El Niño weather phenomenon has limited the amount of heating days.
Prices of the fuel are down nearly 33% so far this year, as weak demand and healthy stockpiles weighed.
The EIA's next storage report slated for release on Thursday, December 31 is expected to show a withdrawal of approximately 45 billion cubic feet for the week ending December 25.
That compared with a decline of 26 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 98 billion cubic feet.
Elsewhere on the Nymex, crude oil for February delivery settled at $38.10 a barrel by close of trade on Thursday, up $3.52, or 9.7%, on the week, while heating oil for January delivery slumped 0.56% on the week to settle at $1.109 per gallon.
Heading into the final week of the year, trading volumes are expected to remain light as many traders already closed books due to the holiday period, reducing liquidity in the market and increasing volatility.