Natural gas falls to two-week low on warmer weather, production
Natural gas fell to the lowest in more than two weeks as forecasts for warmer-than-usual weather and rising output fueled speculation that withdrawals from storage sites will drop below last year’s levels.
Futures for January delivery declined as much as 3.5 percent on the New York Mercantile Exchange to $3.947 per million British thermal units, the lowest for a front-month contract since Nov. 14. The first half of December is set to be milder than normal, with “widespread warmth” dominating the next 6 to 16 days, according to Commodity Weather Group.
U.S. gas production is currently 4.4 billion cubic feet a day higher than last year at 70.3 billion, Morgan Stanley analysts including Adam Longson said in a report e-mailed today. Growth will “balloon” to more than 5 billion at the current rate while the next three reports by the Energy Information Administration will probably show withdrawals from storage facilities fell short of last year’s, the bank said.
“In December, we see natgas trading between $3.75-$4.55,” brokerage INTL FCStone Inc. said in a report e-mailed Nov. 29. “Things look more uncertain heading into next year where the EIA sees more supply coming in, while U.S. gas demand is expected to ease for the first time in six years.”
Natural gas for January delivery fell 2.7 percent to $3.976 per million Btu by 7:08 a.m. in New York. The volume of all futures traded was more than triple the 100-day average for the time of day. The fuel was today’s biggest loser in the Bloomberg Commodity Index.
The weather in the U.S. will be milder than usual over the next two weeks, after a cooler pattern since Sept. 1, BNP Paribas SA said in a report e-mailed today. About 49 percent of U.S. households use gas for heating, according to EIA data.
Forecast Cut
Citigroup Inc. cut its 2015 U.S. gas price forecast by 11 percent to $3.90 per million Btu on high inventory levels and rising output, the bank said in a report e-mailed yesterday. In 2016, the fuel will average $3.70 per million Btu from a previous forecast for $4.20 per million Btu.
“Production growth from the Marcellus and Utica should stay robust, while the Anadarko basin, Bakken and elsewhere contribute additional supply,” Citigroup analysts including Ed Morse said. “Should production be stronger than thought, there is risk of a further fall in price.”
Here we are to serve you with news right now. It does not cost much, but worth your attention.
Choose to support open, independent, quality journalism and subscribe on a monthly basis.
By subscribing to our online newspaper, you can have full digital access to all news, analysis, and much more.
You can also follow AzerNEWS on Twitter @AzerNewsAz or Facebook @AzerNewsNewspaper
Thank you!