Natural gas futures settled near a two-month low as mild weather dominated forecasts for the eastern U.S. through the first week of March.
Temperatures may be mostly average or above normal in the Northeast and Midwest through March 7, limiting heating demand for gas, according to Commodity Weather Group LLC. Money managers betting on natural gas are the most bearish on record as the biggest stockpile surplus in four years expands.
Gas production from shale formations has left inventories at a seasonal record, sending futures tumbling. Time is running out for the extended winter cold needed to erode the supply glut that’s threatening to depress prices into the second half of 2016.
“Traders are being a little bit cautious because we could still see some cold weather at the back end of the forecast, but there’s really nothing to support the market,” said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. “We’re at the end of the winter season, and we’re loaded up on storage.”
Natural gas for March delivery rose 1.7 cents to settle at $1.821 per million British thermal units on the New York Mercantile Exchange. It closed at $1.804 on Feb. 19, the lowest since Dec. 18.
Futures gained slightly as traders eyed mixed weather forecasts for the eastern U.S. after this week’s warmth. A noon update to the government’s Global Forecast system weather model showed mostly average temperatures in the eastern U.S. from Feb. 27 through March 7, with colder readings confined to New England.