Natural Gas Futures Record Biggest Weekly Decline Since May

  • Mild weather, shale glut pushing stockpiles toward record
  • Speculators are staring down lows from 2012: analyst

Natural gas futures capped the biggest weekly decline since May as warmer-than-usual weather delayed the start of winter demand for the heating fuel.

Contracts fell for the fifth week out of six, slipping beneath $2.30 per million British thermal units to a 3-year low. Gas is slumping on the warmth and on a glut of shale supplies that’s pushing stockpiles toward record levels.

“Speculators are staring down the $1.902 low from the week ending 4/20/2012,” Drew Wozniak, vice president of market research at United-ICAP, a brokerage in Jersey City, New Jersey, said in a note to clients. “The only trend that will continue to happen is the front month continuing to lose value.”

Gas futures fell 10 cents Friday, or 4.2 percent, to settle at $2.286 on the New York Mercantile Exchange, the lowest settlement since June 2012. Volume was 15 percent above the 100-day average at 2:41 p.m. in New York. Contracts dropped 5.9 percent for the week, the most since the five days ended May 29.

Mild weather will probably persist in much of the U.S. through Nov. 6, according to MDA Weather Services. Denver may reach 68 degrees Fahrenheit (20 Celsius) on Nov. 5, 7 degrees above normal, AccuWeather data show. The city’s low on that day might be 38, also 7 degrees above normal.

Inventories rose 81 billion cubic feet to 3.814 trillion in the week ended Oct. 16, the Energy Information Administration said.

“The market continues to search for a bottom,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. “There are mounting fears about all this gas we have coming out of the ground and expectations of seeing 4 trillion cubic feet of storage or more by the end of injection season.”

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