Natural gas futures will fall next week on forecasts for moderating weather by the middle of next month, after waves of cold in January stoked demand for the heating fuel, according to a Bloomberg survey.
Six of 12 analysts, or 50 percent, said prices will decline on the New York Mercantile Exchange through Feb. 7. Four, or 33 percent, said gas will gain and two said prices will stay the same. Last week, 54 percent said futures would advance.
A surge of cold weather sweeping the lower 48 states next week will ease from Feb. 9 through Feb. 13, said Commodity Weather Group LLC in Gaithersburg, Maryland. Chicago’s low, which plunged to minus 11 degrees Fahrenheit (minus 24 Celsius) on Jan. 28, will rise to 19 degrees a week later, to according to AccuWeather Inc.
“The market’s been very volatile, but it’s got a pretty simple theme: when temperatures go down prices go up and the reverse will happen if we do get some moderating weather,” said Tom Saal, senior vice president of energy trading at FCStone Latin America LLC in Miami. “Temperatures in Chicago were below zero and now they’re closer to freezing.”
Natural gas for next-month delivery slid 17.1 cents, or 3.3 percent, to $5.011 per million British thermal units during the first four days of trading this week on the Nymex. The futures have gained 18 percent this month.
February futures surged 10 percent to $5.557 on Jan. 29, the contract’s last day of trading, closing at the highest level since Jan. 25, 2010. The March contract retreated 8.3 percent yesterday in the biggest drop since Sept. 11, 2009. Gas is the most volatile component in the Standard & Poor’s GSCI index of 24 commodities.
About 49 percent of U.S. households use gas for heating, U.S. Energy Information Administration data show.
U.S. gas inventories declined by 230 billion cubic feet to 2.193 trillion in the week ended Jan. 24, more than the five-year average drop of 162 billion, EIA data show. A supply deficit to the five-year average widened to a record 16.6 percent from 13.2 percent in the previous report.
The gas survey has correctly forecast the direction of prices 51 percent of the time since its June 2004 introduction.
Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:
RISE FALL NEUTRAL
4 6 2
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