Natural Gas Declines on Outlook for Warm-Up After StormChristine Buurma
Natural gas futures in New York slid for the third time in four days as meteorologists predicted milder weather after an East Coast snowstorm.
Temperatures may be normal or higher than average across the lower 48 states from Dec. 6 through Dec. 10, according to Commodity Weather Group LLC in Bethesda, Maryland. A nor’easter dropped snow and rain from the South to New England today, snarling travel on the eve of the U.S. Thanksgiving Day holiday.
“The market has a downward bias as the weather calms down and we start to see some moderation into the beginning of December,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The past couple of days have been really volatile, with prices highly reactive to these forecasts.”
Natural gas for January delivery fell 4.8 cents, or 1.1 percent, to settle at $4.355 per million British thermal units on the New York Mercantile Exchange. Volume for all futures traded was 11 percent below the 100-day average.
Gas earlier rose as much as 2.9 percent after a government report showed stockpiles dropped by a record 162 billion cubic feet in the week ended Nov. 21 to 3.432 trillion. Analyst estimates compiled by Bloomberg showed a decrease of 150 billion, and a survey of Bloomberg users predicted supplies would fall by 159 billion. The five-year average decline for the period is 6 billion.
“It’s a case of prices moving too far, too fast,” said Aaron Calder, an analyst at Gelber & Associates in Houston. “Traders are taking the opportunity to take some profits. We’re seeing a huge blanket of warmth for the first few days of December.”
The low in Detroit on Dec. 7 may be 36 degrees Fahrenheit (2 Celsius), 10 above normal, data from AccuWeather Inc. in State College, Pennsylvania, show. Washington temperatures may fall to 43 degrees, 9 higher than usual.
About 49 percent of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical arm.
Gas output may climb 4.8 percent this year to average a record 73.79 billion cubic feet a day, the EIA said Nov. 12 in its monthly Short-Term Energy Outlook report.
Production from the Marcellus shale formation in the Northeast may advance 1.3 percent in December to 16.1 billion cubic feet a day, the agency said Nov. 10 in its monthly Drilling Productivity Report.