Tuesday, November 28, 2006

Natural-gas futures touched their highest levels in over a week ahead of the expiration of the December contracts, while growing expectations that key oil producers will agree to further cut output at a meeting next month helped lift crude prices closer to $61 a barrel.

Natural-gas for December delivery rose 12.2 cents to $8.22 per million British thermal units on the New York Mercantile Exchange after a high of $8.14, its strongest intraday level since Nov. 17.
January natural gas, which will become the lead-month contract at the session's end, was at $8.57, up 21.3 cents.

January crude was last up 53 cents at $60.85 a barrel in New York, after earlier climbing as much as 1% to $60.90.

"Some forecasters are making the daring prediction that it might actually get cold in December," said Phil Flynn, a senior analyst at Alaron Trading, in e-mailed commentary.

"Though the eastern third of the country is enjoying an atypical warm spell for this time of year ... change is on the way in the form of an Arctic air mass currently chilling the Northwest and Rocky Mountains," said John Kilduff, an analyst at Fimat USA.

Still, "winter readings don't appear to have much staying power and should diminish by the middle of next week," he said. "Until cold with some longevity blankets the high consumption regions, prices will have difficulty over $8," he said, adding that "right now, the coming cold just doesn't seem severe enough to eat up much storage."

Early estimates for Thursday's weekly Energy Department update on natural-gas supplies calls for a decline between 5 billion and 40 billion cubic feet, according to Fimat.