© Reuters. Natural gas futures surge into bull market territory

Investing.com - U.S. natural gas prices extended a recent rally on Tuesday to surge into a bull market as updated forecasts for January turned cooler.

A storm system that triggered deadly tornadoes and flooding in the U.S. Midwest and Southwest was pushing north, to a swath of the country from Iowa to Massachusetts.

Bullish speculators are betting on the wintery weather to increase demand for the heating fuel. The heating season from November through March is the peak demand period for U.S. gas consumption.

for delivery in February on the New York Mercantile Exchange jumped 7.1 cents, or 3.13%, to trade at $2.327 per million British thermal units during U.S. morning hours. It earlier rose to $2.344, the most since November 25.

, natural gas soared 17.7 cents, or 8.51%. Prices are up almost 29% over the past seven trading days as forecasts called for a return to cool weather, following a warm spell which took prices to the lowest level since March 1999 earlier this month. Prices fell to a 17-year low of $1.684 on December 18.

Natural gas typically rises ahead of the winter as colder weather sparks heating demand, yet an unusually mild start to winter due to the El Niño weather phenomenon has limited the amount of heating days.

Trading volumes are expected to remain light in the final few days of the year as many traders already closed books due to the holiday period, reducing liquidity in the market which could result in exaggerated moves.

Despite recent gains, prices of the fuel are still down nearly 20% so far this year, as weak demand and healthy stockpiles weighed.

Total U.S. natural gas storage stood at 3.814 trillion cubic feet, 14.7% higher than levels at this time a year ago and 10.8% above the five-year average for this time of year.

The U.S. Energy Information Administration's next slated for release on Thursday, December 31 is expected to show a withdrawal of approximately 45 billion cubic feet for the week ending December 25.

That compares with a drawdown of 32 billion cubic feet in the prior week, 26 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 98 billion cubic feet.

Elsewhere on the Nymex, for delivery in February rose 49 cents, or 1.34%, to trade at $37.30 a barrel, while for January delivery tacked on 1.41% to trade at $1.136 per gallon.