`Giant' Glut Sends U.S. Gas to Lowest Price Since December

Updated on
  • Stockpiles were 25.8% above five-year average as of Feb. 12
  • Mild weather seen in lower 48 states through early March

The heftiest U.S. natural gas surplus in four years is getting bigger by the week, pushing prices to the lowest level since December.

Stockpiles were 25.8 percent above the five-year average in the seven days ended Feb. 12, compared with 23.4 percent in the prior period, government data released Thursday showed. The glut has expanded for three straight weeks.

Mild winter weather is limiting heating demand for gas, sending prices down about 20 percent this year and expanding the biggest inventory surplus since 2012. Unless late-season cold erodes stockpiles, oversupply will linger into the second half of the year, pressuring futures lower.

“The bulls have been waiting for demand to turn around and eat into this giant storage glut, but it doesn’t look like that’s going to happen,” said Aaron Calder, an analyst at Gelber & Associates in Houston.

Natural gas for March delivery fell 9 cents, or 4.6 percent, to $1.852 per million British thermal units on the New York Mercantile Exchange, the lowest settlement since Dec. 18.

No deep freeze is forecast for the lower 48 states through early March, according to Commodity Weather Group LLC. Stockpiles dropped 158 billion cubic feet last week to 2.706 trillion, compared with the five-year average withdrawal of 170 billion, Energy Information Administration data show.

“Stockpiles are more than 20 percent above the five-year average now, and it’s only going to get uglier,” said John Kilduff, a partner at Again Capital LLC in New York. “The weather forecasts are getting worse and worse for the bulls.”

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