Natural gas futures continued their steady climb from year-low prices in October during trading on the New York Mercantile Exchange, where natural gas for November delivery increased 6.9 cents, or 2 percent, to $3.6000 a million British thermal units.

Analysts attribute rising gas futures to the anticipation of rising demand this winter. Futures prices were recently down 28 percent from the 2011 calendar high but market watchers say the price has bottomed out and that a bump should be expected, despite a recent U.S. Department of Energy report that found natural gas inventories to be much higher than expected. Analysts say that, regardless of inventory storage, the coming winter months should drive prices higher.

Consensus is building among market watchers that traders shorted the market — when futures prices dove 3.5 percent — in anticipation of a bearish report a day before it was released. Once the numbers were published, insiders say, a second wave of selling hit the market and forced prices down.

Analysts say that futures prices will continue to rise and that the time for shorting the market may be over.

“The downside could be running out of steam,” TD Securities said.

Sources

“US GAS: Gas Futures Continue Recovery From 2011 Lows,” The Wall Street Journal, Oct. 14, 2011.