Gas News Tue, 20 Mar 2001, 6:12pm EST

03/20 17:03 Natural Gas Rises as Forecasts Revive Concern Supplies Are Low By Bradley Keoun

New York, March 20 (Bloomberg) -- Natural gas surged more than 4 percent, the biggest gain in three weeks, as forecasts for below-normal temperatures next week in the heating fuel's largest markets rekindled concern about low inventories.

Average temperatures are expected to be below normal for most of next week in the north-central and northeastern U.S., which together account for more than half the nation's residential gas usage. The National Weather Service forecasts come with inventories approaching a record low and several new gas-burning power plants slated for startup this summer.

``We're falling further behind in meeting natural gas demand, not catching up,'' said Tim Evans, senior energy analyst at IFR Pegasus in New York.

Natural gas for April delivery rose 22.4 cents, or 4.4 percent, to $5.287 per million British thermal units on the New York Mercantile Exchange, the biggest one-day increase since Feb. 27. Prices have risen 7.7 percent in the past four sessions.

U.S. inventories of natural gas in underground storage facilities fell 75 billion cubic to 711 billion cubic feet, or 37 percent below year-earlier levels, the American Gas Association said last week. Inventories could easily fall close to the record low of 546 billion reached in April 1996, traders said.

Prices may climb higher in coming weeks as utilities begin buying gas to burn in power plants to make electricity for summer air-conditioning, Evans said. Today's rally accelerated as speculators who were expecting prices to fall bought contracts to cancel their earlier positions, he said.

``What you had today was a moment of recognition, where people realized that the price wasn't going to go lower and that they better buy it sooner rather than later,'' Evans said.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Gas%20News&touch=1&T=energy_news_story.ht&s=AOrfTrhZuTmF0dXJh

-- Martin Thompson (mthom1927@aol.com), March 20, 2001