U.S. natural gas futures capped the worst first-quarter loss since 2012 as cold weather faded, expanding a stockpile glut.
Gas dropped after a government report showed the inventory surplus to the five-year average climbed to 51.9 percent last week, the biggest in four years. Rising spring temperatures will erode heating demand, leaving even more of the fuel in storage.
Lackluster winter heating demand failed to trim the supply overhang, sending futures to historic lows as gas production from shale basins flooded the market. Without a sweltering summer or a sharp decline in output, prices are poised to remain under pressure.
“We need to see constructive signs emerge that the industry can handle this excess inventory level,” said Teri Viswanath, managing director for natural gas at PIRA Energy Group in New York. “The heating season is largely behind us.”
Natural gas for May delivery fell 3.7 cents, or 1.9 percent, to settle at $1.959 per million British thermal units on the New York Mercantile Exchange. Prices slid 16 percent this quarter.
Gas inventories dropped 25 billion cubic feet last week to 2.468 trillion, the U.S. Energy Information Administration said in a weekly report Thursday. Supplies were 68.3 percent above the year-earlier level.