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By Bloomberg

Natural gas extended gains after the biggest surge in 11 months as a blast of Arctic weather predicted to swoop into the U.S. signaled increased demand after a mild December.

Futures for February delivery rose as much as 8 cents, or 2.4 percent, to $3.312 per million British thermal units in electronic trading on the New York Mercantile Exchange and was at $3.294 at 11:29 a.m. Singapore time. It climbed 9.9 percent to $3.233 yesterday, the largest advance since Feb. 19. Total volume was about 16 percent below the 100-day average.

Gas is gaining for a third day as the government’s midday Global Forecast System showed temperatures will be well below normal from the Midwest to Northeast from Jan. 22 through Jan. 26, said Frontier Weather Inc.

“The important thing is that it’s still cold, it didn’t warm up, and then the forecast changed to colder weather,” said Tom Saal, a senior vice president of energy trading at FCStone Latin America LLC in Miami. “These are the weeks in the middle of January and early February where we could see those larger withdrawals from storage.”

The low temperature in Chicago on Jan. 27 will drop to 6 degrees Fahrenheit (minus 14 Celsius), 12 below normal, AccuWeather Inc. said on its website. The Midwest and Northeast account for 63 percent of U.S. heating demand, according to the EIA, the Energy Department’s statistical arm.

Arctic Cold

The latest Global Forecast model shows temperatures declining to about 15 to 20 degrees below normal in the Midwest and Northeast late next week, said Jim Southard, a meteorologist with Frontier Weather in Tulsa, Oklahoma. The midday model showed milder weather at the end of the month, as above-average readings are predicted for central and eastern states, he said.

The overnight forecasts, which can carry more weight because they incorporate more computer models, indicated that there’s a potential for “another massive Arctic outbreak” later this month, Matt Rogers, president of Commodity Weather in Bethesda, Maryland, said in a report to clients.

Gas inventories probably fell by 229 billion cubic feet, according to the median estimate in the Bloomberg survey of 19 analysts. Projections ranged from declines of 182 billion to 255 billion.

Stockpiles of the heating and power-plant fuel totaled 3.089 trillion cubic feet through Jan. 2.

“Fears of a March inventory glut have proved to be premature, and significant cold has the potential to create shortage issues, albeit not on the scale of last year,” Aaron Calder, a senior market analyst at Gelber & Associates in Houston, said in a report.