U.S. Gas Settles at 17-Year Low on Outlook for Widespread Warmthby
U.S. natural gas futures settled at a 17-year low as forecasts showed mild March weather that would curtail demand, expanding a supply glut.
A cold spell in the Northeast and Great Lakes region this week will be followed by a widespread warmup, according to Commodity Weather Group LLC. Gas stockpiles probably fell by 39 billion cubic feet last week, the least in two decades for the time of year, based on the median of 16 analyst estimates compiled by Bloomberg.
Gas has tumbled to the lowest prices since the 1990s as supply from shale formations outpaces heating demand, leaving a glut of the fuel in storage. With only a few weeks of winter left, the surplus is set to expand, keeping prices depressed into the second half of the year.
“It’s really difficult for natural gas to rally with the time of year it is and the amount of supply we have in the ground,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “Even if we get a cold spike, it’s not going to get cold enough for long enough to cut into the supply surplus.”
Natural gas for April delivery fell 6.4 cents, or 3.7 percent, to settle at $1.678 per million British thermal units on the New York Mercantile Exchange, the lowest since Feb. 26, 1999. Prices are down 28 percent this year.
Declining gas prices sent eastern U.S. wholesale electricity to a record seasonal low Thursday.
- Spot on-peak power at PJM Western hub, the benchmark for the country’s largest grid, averaged $27.60/MWh as of 2 p.m. and New York City prices averaged $21.3443, the least on record for this time of the year, according to grid data compiled by Bloomberg.
- The low temperature in New York City on March 10 may be 53 degrees Fahrenheit (12 Celsius), 20 more than usual.