Natural gas futures may fall next week as unusually mild weather heading into mid-January reduces the need for heating fuel.
Ten of 14 analysts in a Bloomberg survey, or 71 percent, predicted that futures will decline on the New York Mercantile Exchange through Jan. 18. Three, or 21 percent, said gas will rise and one said prices will stay the same. Last week, 50 percent of participants said gas would advance this week.
Eastern U.S. temperatures will be above normal over the next five days and warm weather will linger in the Southeast through Jan. 19, according to MDA Weather Services in Gaithersburg, Maryland. Gas futures rose 2.6 percent yesterday, the first gain in four days, after the Energy Information Administration reported the biggest weekly stockpile decline since February 2011, which followed a cold blast.
“The temperatures are going to be well above normal and we should see a major drop-off in demand again next week,” Phil Flynn, senior market analyst at Price Futures Group in Chicago. “We had the biggest withdrawal in two years and we could barely muster a 10-cent rally. It goes to show we are going to have significant challenges to rally next week.”
Natural gas advanced 4 cents, or 1.2 percent, to $3.327 per million British thermal units this week in New York, the third gain in four weeks. Prices rebounded 4.2 percent today, the biggest one-day gain since Dec. 20. Futures are up 20 percent from a year ago.
“There is a good chance that we will take out $3 next week and we could get into the $2.95 area,” Flynn said.
The low temperature in Chicago tomorrow may be 48 degrees Fahrenheit (9 Celsius), 30 above normal, said AccuWeather Inc. in State College, Pennsylvania. New York City’s low Jan. 15 may be 10 above the usual reading at 37 degrees.
About 50 percent of U.S. households use gas for heating, Energy Department data show.
U.S. stockpiles dropped by 201 billion cubic feet to 3.316 trillion in the week ended Jan. 4, data from the Energy Department’s EIA show. Analyst estimates predicted a decline of 191 billion and a separate survey of Bloomberg users forecast a 193-billion drop.
A surplus to the five-year average fell to 10.7 percent from 12.4 percent the previous week.
The gas survey has correctly forecast the direction of prices 50 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 natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:
RISE FALL NEUTRAL
3 10 1