Natural gas declined for a third day in New York, extending the steepest drop in more than six years on speculation that warmer U.S. weather will reduce demand for heating fuel.
The contract for March delivery, which expires today, fell as much as 5.6 percent to $4.811 per million British thermal units in electronic trading on the New York Mercantile Exchange at 12:26 p.m. in London. Prices are down 22 percent this week, and a settlement at current levels would mean the biggest three-day loss since December 2005. The more-active April contract declined 3 percent to $4.552. The volume for all futures traded was about 14 percent above the 100-day average.
Gas slid 6.4 percent yesterday to $5.096 per million Btu, the lowest settlement since Feb. 12, after forecasters including MDA Weather Services said frigid weather in the Midwest and East will ease starting March 7. Futures climbed to a five-year high this month as below-normal temperatures boosted demand, pushing U.S. stockpiles to 10-year seasonal lows.
“The market has sold off on the expectation that the worst is behind us,” said Teri Viswanath, the director of commodities strategy at BNP Paribas SA in New York. “This is nothing more than institutional investors taking profits and liquidating their March contract as we approach expiry.”
A storm moving through the eastern U.S. will arrive in Washington through 4 a.m., bringing as much as 2 inches (5 centimeters) of snow and continuing through the morning hours, according to the National Weather Service in Sterling, Virginia.
Waves of polar air that stoked demand for heating fuels reduced stockpiles to 1.443 trillion cubic feet on Feb. 14, the lowest level for the time of the year since 2004, U.S. Energy Information Administration data show.
Storage levels were 34 percent below the five-year average for the week, a record deficit in data going back to 2005. Supplies also dropped to a record deficit to year-earlier levels of 40 percent.
Goldman Sachs Group Inc. cut its end-of-March inventory estimate to 1 trillion cubic feet, from an earlier forecast of 1.198 trillion, Samantha Dart, a London-based analyst with the bank, said in a note Feb. 24.
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