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By Bloomberg

Natural gas futures extended a rally from a 27-month low in New York amid speculation a blast of arctic air may increase demand for the heating fuel.

Frigid temperatures are pushing into the Midwest, Great Lakes and Northeast behind an arctic cold front, the National Weather Service said in an advisory on its website today. Wind chill warnings and advisories are in effect, it said.

Futures for February delivery climbed as much as 4.4 percent to $3.135 per million British thermal units in electronic trading on the New York Mercantile Exchange and were at $3.132 at 4:04 p.m. Singapore time. The contract gained 4 percent on Jan. 2 after dropping to the lowest intraday level since Sept. 2012. The volume of all futures traded was about 88 percent the 100-day average.

Temperatures will be 15 to 25 degrees Fahrenheit below average from the Northern Plains to the Upper Great Lakes and Western Ohio Valley, the weather service said in a report at 2:51 a.m. eastern time today. Snow is possible over parts of the Middle Mississippi Valley to the Ohio Valley and the Northern Rockies and High Plains.

An estimated 49 percent of U.S. households use natural gas for heating, Energy Information Administration data show.

Gas consumption rose last week as temperatures slid in the Midwest to the East Coast, boosting storage withdrawals after they came in below-average for five weeks, according to Tim Evans, an energy analyst at Citi Futures Perspective in New York, and government data.

U.S. Stockpiles

Stockpiles of the heating and power-plant fuel probably declined by 133 billion cubic feet last week, compared with a 26 billion drop in the seven days ended Dec. 26, Evans said in a note on Dec. 31. Gas demand surged 21 percent to average 99.9 billion cubic feet a day, according to LCI Energy Insight in El Paso, Texas.

Inventories in the lower 48 states totaled 3.22 trillion cubic feet through Dec. 26, a 2.5 percent deficit to the five- year average, said the EIA, the Energy Department’s statistical arm. Supplies were 7.8 percent above year-earlier levels.

Gas futures fell below $3 per million Btu on Dec. 26 for the first time in 27 months as mild weather crimped demand and soaring production helped erode the inventory deficit. Prices dropped 32 percent last year.