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Natural Gas Futures Slide as Forecasts of Colder Weather Fade
Natural gas futures dropped in New York for the first time in three days as weather forecasts for late December and early January turned warmer.
Gas slid as much as 3.7 percent after Commodity Weather Group LLC in Bethesda, Maryland, predicted mostly normal temperatures in the eastern half of the U.S. from Dec. 29 through Jan. 2. Yesterday’s outlook was for colder-than-average weather in those regions.
“The weather forecast is becoming as volatile as the price,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “The temperature outlook became much less supportive and the market just started selling.”
Natural gas for January delivery fell 11.3 cents, or 3.3 percent, to $3.304 per million British thermal units at 9:21 a.m. on the New York Mercantile Exchange. The futures are up 11 percent this year, heading for the first annual gain since 2007. Prices declined to $3.261 per million Btu in intraday trading on Dec. 14, the lowest since Sept. 28.
The low in Chicago on Jan. 1 may be 20 degrees Fahrenheit (minus 7 Celsius), 1 more than the usual reading, according to AccuWeather Inc. in State College, Pennsylvania. About 50 percent of U.S. households use gas for heating, Energy Department data show.
A department report scheduled for release tomorrow will show gas inventories fell by 76 billion cubic feet last week to 3.73 trillion, according to the median of 13 analyst estimates compiled by Bloomberg. The five-year average withdrawal for the period is 144 billion. Last year, supplies declined by 100 billion during the week.
Stockpiles rose 2 billion cubic feet in the week ended Dec. 7 to 3.806 trillion cubic feet, a government report showed Dec. 13. It was the latest seasonal supply gain since Dec. 30, 2005, according to department data compiled by Bloomberg.
Supplies were 8 percent above the five-year average, compared with 4.6 percent the previous week. The gas inventory surplus to the average has declined from a six-year high of 61 percent in March, department data show.
This year will probably overtake 1998 to become the warmest year on record in the U.S., the Climatic Data Center said Dec. 6 in a monthly climate report. The first 11 months were the warmest start to any year in the contiguous states since the nation began keeping records in 1895, the center said.
The U.S. raised its forecast for natural gas output in 2012 by 0.6 percent in a report Dec. 11.
Marketed gas production will average 69.22 billion cubic feet a day this year, up from 68.84 billion estimated in November, the Energy Department said in its monthly Short-Term Energy Outlook. Output may rise 0.5 percent in 2013 to 69.59 billion a day, department estimates show.
Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $2.78 per million British thermal units, compared with the previous estimate of $2.77, according to the report from the department’s Energy Information Administration.
The boom in oil and natural gas production helped the U.S. cut its reliance on imported fuel. America met 83 percent of its energy needs in the first eight months of the year, department data show. If the trend goes on through 2012, it will be the highest level of self-sufficiency since 1991.
- Natural Gas Continues Its Slide (amp2012.com)
- Natural Gas Caps Weekly Decline as Supplies Approach Record ( Bloomberg) (amp2012.com)
- Natural Gas Declines to 9-Week Low on Outlook for Stockpiles – Bloomberg (bloomberg.com)
- Natural gas will remain below $4 in 2013, S&P forecasts (fuelfix.com)