Natural gas at highest price in the last 4 years …

Natural gas rose for a fifth day and was poised for the highest close in almost four years as freezing weather in the U.S. boosted demand for heating fuel.

Futures for February delivery advanced as much as 5 percent to $5.442 per million British thermal units in electronic trading on the New York Mercantile Exchange, and were at $5.389 at 8:28 a.m. in London. The volume of all futures traded was about six times the 100-day average. The contract jumped 20 percent last week, the most since October 2010.

January is on track to be the coldest month of the century in the lower 48 states, according to Commodity Weather Group LLC. U.S. inventories of natural gas, used to warm 49 percent of U.S. households, have dropped at a record pace during the heating season, government data show.

Chicago was colder than the South Pole at the start of January as energy consumption rose and gas production sites reported disruptions because of freezing conditions.

Four of the 10 coldest days of the 21st century in the contiguous U.S. states occurred this month,Matt Rogers, president of Commodity Weather Group in Bethesda, Maryland said last week.

Arctic Air

The U.S. East will get another blast of Arctic air this week, with snow and sleet reaching parts of southeast Texas, according to the National Weather Service.

A weather system at the front of a “significantly cold air mass” will move northeast to southeast Canada, producing light snow from parts of the Northeast U.S. and Great Lakes to the middle Mississippi Valley, the weather service said. Afternoon high temperatures are forecast to be between 10 and 30 degrees Fahrenheit below normal through Jan. 29, it said.

“Dangerous” wind chills are expected through midday tomorrow in parts of Minnesota and Wisconsin, according to the weather service.

Chicago will have a low of minus 16 degrees Fahrenheit (minus 27 Celsius) today, 34 degrees below normal, according to AccuWeather Inc. in State College, Pennsylvania. The high for the day will be minus two degree. Boston’s low today will be 13 degrees, nine degrees below the average.

A deficit of U.S. natural gas stockpiles versus the five-year average widened to a record 14.9 percent earlier this month. Spot gas for delivery in New York City and New England jumped to all-time highs last week amid surging demand and pipeline constraints.

Inventory Drop

Gas inventories dropped by 1.386 trillion cubic feet to 2.423 trillion from Oct. 31 through Jan. 17. The drop was 50 percent more than the five-year average decline of 927 billion for the period, Jose Villar, an analyst with the U.S. Energy Information Administration, said in an e-mail Jan. 23. It’s the fastest pace of withdrawals on record for the period, he said.

Goldman Sachs Group Inc. (GS) cut its end-of-March inventory projection to 1.388 trillion cubic feet from an earlier estimate of 1.605 trillion, Samantha Dart, a London-based analyst with the bank, said in a Jan. 20 note to clients. Lower stockpile levels combined with average weather in February and March mean gas prices may be closer to $4.40 to $4.50 this year, higher than the bank’s current forecast of $4.25, she said. Bloomberg

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