Natural gas futures fell for the third time in four days as forecasts for warmer-than-normal weather signaled reduced demand for the heating fuel.
Gas declined as much as 2 percent. Temperatures will be above normal in the central U.S. from Oct. 13 through Oct. 17 before spreading to the East Coast over the next 11 to 15 days, according to Commodity Weather Group LLC in Bethesda, Maryland. The Energy Department expects gas stockpiles to rise to a record before demand begins to rise with colder weather.
“Winter is one of the main events in the natural gas market, it’s just not there yet,” said Tom Saal, senior vice president of energy trading at INTL Hencorp Futures LLC in Miami. “We have a lot of inventory. It’s keeping the market actually a little bit below where it was a year ago.”
Natural gas for November delivery dropped 3.1 cents, or 0.9 percent, to $3.365 per million British thermal units at 9:55 a.m. on the New York Mercantile Exchange. The futures are down 3.3 percent from a year ago.
The low temperature in Chicago on Oct. 17 may be 49 degrees Fahrenheit (9 Celsius), 4 above normal, and Detroit may be 6 above normal at 50 degrees, according to AccuWeather Inc. in State College, Pennsylvania. New York’s low on Oct. 22 will be 54 degrees, 6 above the usual reading.
Heating needs in the lower 48 states will be 59 percent below normal Oct. 14 through Oct. 18, data from Weather Derivatives in Belton, Missouri, show. The months from November through March make up the peak period for U.S. gas consumption.
U.S. inventories totaled 3.653 billion cubic feet in the week ended Sept. 28, 8.3 percent above the five-year average for the period, the department said last week. Record gas demand from electricity generators because of an unusually hot summer and decade-low seasonal prices reduced the supply surplus from a six-year high of 61 percent on March 30.
The department expects stockpiles to reach an all-time high of 3.95 trillion cubic feet by the end of October before the heating season, according to its monthly Short-Term Energy Outlook Sept. 11.
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