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U.S. Gas Bears Beat Groundhog Day in Calling for End of Winter

  • Blizzard-driven gas rally was worth less than a dime in 7 days
  • Gas prices are at the lowest seasonal levels since 2002

U.S. natural gas bears aren’t waiting for Punxsutawney Phil, the famed Pennsylvania groundhog, to make a prognostication next week on whether the weather is changing: They say winter is over.

Seven of 12 analysts and traders surveyed by Bloomberg said they’re bearish on futures, while three are bullish and two see prices holding steady. Last week, half of the 14 respondents were bullish.

The winter storm that dumped a record amount of snow on parts of the East Coast last week added only 9.1 cents per million British thermal units to natural gas prices since Jan. 19. That was the longest streak of gains in more than a year, while short of some of the single-day price swings seen earlier this month. Forecasters say the start of February will be unusually mild, including Tuesday, when Phil searches for his shadow. No shadow means winter is over.

Phil’s Unnecessary

“Whatever Punxsutawney Phil sees on Tuesday doesn’t matter, winter is over,” said Jason Schenker, president of Prestige Economics LLC in Austin, Texas. “We are coming to the end of heating demand with extremely high inventory levels. We’ve got a lot of downside for prices.”

Gas for next-month delivery rose 4.3 cents, or 2 percent, so far this week to settle Thursday at $2.182 per million Btu on the New York Mercantile Exchange. Even with those gains, prices are hovering at the lowest level for this time of the year since 2002.

The high temperature in Punxsutawney on Feb. 2 will be 49 degrees Fahrenheit (9 Celsius), 17 above normal, AccuWeather Inc.’s website showed. The next day, the reading in Manhattan will jump to 56. About half of U.S. households use gas for heating.

A warming weather pattern in the East caused in part by El Nino reduced demand for heating fuels, allowing a stockpile glut to worsen this winter.

Schenker says gas futures may average less than $2 per million Btu in the second quarter, when demand slumps further before summer heat. “It looks like the El Nino trade will win this winter.”

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