BLBG: Natural Gas Drops to Six-Week Low on Forecasts of Mild Weather
Natural gas futures dropped to a six- week low on forecasts of milder weather that may reduce demand for the heating fuel.
Gas futures declined for a fifth day as meteorologists predicted widespread warmer-than-normal weather in the eastern and central U.S. next week. Temperatures may be as much as 14 degrees above normal in the Midwest, according to MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland.
“The market is ignoring the current cold because it believes we will see warmer temperatures,” said Phil Flynn, vice president of research at PFGBest in Chicago. “There’s a sense that the market is going to continue to be well- supplied.”
Natural gas for March delivery fell 3.4 cents, or 0.8 percent, to $4.006 per million British thermal units at 9:44 a.m. on the New York Mercantile Exchange. The futures have declined 24 percent from a year ago. Gas earlier slipped to $3.992, the lowest intraday price since Dec. 27.
The low temperature in Chicago on Feb. 16 may be 33 degrees Fahrenheit (1 Celsius), 11 degrees above normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Detroit may be 32, 12 degrees above normal.
U.S. heating demand next week will be 18 percent below normal levels, according to Weather Derivatives in Belton, Missouri.
About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.
Gas Inventories
The department may report a larger-than-normal withdrawal from gas inventories for the week ended Feb. 4 after frigid weather across the U.S. last week, analysts predicted.
The Energy Department’s weekly natural gas storage report, due tomorrow, may show a reduction in stockpiles of 193 billion cubic feet for the week ended Feb. 4, according to the median of 16 analyst estimates compiled by Bloomberg.
The five-year average withdrawal is 159 billion, according to the department. A decline of more than 164 billion cubic feet would erase a 0.2 percent surplus to the five-year average.
Gas inventories totaled 2.353 trillion cubic feet for the week ended Jan. 28, department data show.
To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
