Outlook for Mounting U.S. Gas Glut Sends Futures to 10-Week Lowby
U.S. natural gas futures slid to a 10-week low on speculation that mild weather will inflate the biggest supply glut in four years.
A report due at 10:30 a.m. in Washington will probably show inventories dropped by 136 billion cubic feet last week, compared with the five-year average decline of 144 billion for the period, based on the median of 17 analyst estimates compiled by Bloomberg. Stockpiles were 25.8 percent above the five-year average as of Feb. 12.
With March around the corner, gas bulls are running out of the cold days needed to shrink the supply surplus that’s pushed futures about 26 percent lower this year. Output from shale formations is overwhelming demand for the fuel, threatening to keep prices depressed into late 2016.
“The weather is just not cooperating for the bulls,” said John Kilduff, a partner at Again Capital LLC in New York. “Given where we are in terms of overall storage, it looks like prices are going to grind lower.”
Natural gas for March delivery fell 5.1 cents, or 2.9 percent, to $1.727 per million British thermal units at 9 a.m. on the New York Mercantile Exchange after earlier slipping to $1.721, the lowest intraday price since Dec. 18.
March futures expire Thursday. The more actively traded April contract dropped 4.2 cents, or 2.3 percent, to $1.792.