Natural-gas futures prices climbed 1.7% to a six-week high on Thursday, as colder temperatures in the Eastern U.S. boosted home-heating demand and reduced inventories by greater-than-expected levels.
The federal Energy Information Administration said natural gas stockpiles declined by 148 billion cubic feet last week, a bigger drop than analysts' expectations of 137 bcf. Cold weather stirs demand for the fuel, which is used to heat homes across the nation.
More than half of the stockpile decline came in the Eastern U.S., where temperatures turned below normal recently after a warm start to the winter.
But the chillier-than-normal temperatures are expected to recede across the country for the next week to two weeks.
Frigid weather in the southwestern U.S. has freeze-offs at wellheads and shut in about 1 billion cubic feet of gas a day this month, mostly in the San Juan Basin area of Colorado and New Mexico, said Ryan Smith, energy analyst Bentek Energy LLC. Freeze-offs occur when water or other liquids extracted with gas turn to ice and disrupt normal operations. Freeze-offs can cause outages for days or weeks, depending on the extent of severe cold weather.
"We are probably through the worst of the freeze-offs" as temperatures are expected to moderate, he added.
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