Polar Blast Arrives Too Late for U.S. Gas Bulls as Prices Drop

Forecasts for a deep freeze in the eastern U.S. this weekend are too little, too late for bullish natural gas traders.

After the cold snap fades, mostly average to above-normal temperatures will dominate in the Northeast and Midwest from Feb. 15 through Feb. 24, according to MDA Weather Services. A government report due Thursday may show the smallest inventory withdrawal since 2012 for the time of year.

The shale gas boom is filling storage caverns across the U.S., pushing stockpiles to a seasonal record. As winter heating demand begins to ebb, the supply glut is poised to weigh on prices into the second half of 2016.

“The forecasts for cold weather are once again falling apart,” said John Kilduff, a partner at Again Capital LLC in New York. “By the end of March, stockpiles are going to be at least 25 percent above the five-year average.”

Natural gas for March delivery fell 5.2 cents, or 2.5 percent, to settle at $2.046 per million British thermal units on the New York Mercantile Exchange. Prices are down 12 percent this year.

Gas inventories probably slid by 78 billion cubic feet last week, compared with the five-year average withdrawal of 168 billion for the period, based on the median of nine analyst estimates compiled by Bloomberg. Supplies were 17.9 percent above the norm in the seven days ended Jan. 29.

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