NEW YORK--Natural gas futures finished lower for a second straight
session Tuesday, as forecasts for mild temperatures across the East
Coast dashed hopes for a sustained rally.
Natural gas for May delivery settled 6.5 cents, or 1.6%, lower at $4.017 a million British thermal units on the New York Mercantile Exchange.
Futures were dragged lower as weather outlooks called for above-normal temperatures across the East Coast over the next two weeks, providing further support for the view that the chilly temperatures that persisted across the U.S. last month have likely passed.
More than half of all U.S. homes are heated with natural gas, and demand typically peaks in the winter as heating needs rise. Sustained cold through March has helped fuel a rally in natural gas prices in recent weeks, helping push prices above $4 for the first time since September 2011.
Recent forecasts suggest that springtime temperatures are likely to squelch the rally--at least for now. Private forecaster Commodity Weather Group said it sees temperatures climbing to the 80s in the coming two weeks.
However, it warned of a "widespread cool surge" in the Plains states over the next six to 10 days, which could prompt lingering heating needs. Still, the impact of below-normal weather forecasts is likely to diminish as spring progresses and overall normal temperatures climb.
"The last shot of cold is also just delaying the inevitable end of winter, and the further we get out of March, the less ... colder-than-normal temperatures are a factor, which is probably why the market is brushing them off," said Aaron Calder, analyst at Gelber & Associates, in a report.
Traders will get further guidance on natural-gas demand on Thursday when the Energy Information Administration releases its weekly survey of gas stockpiles. Analysts widely expect the recent cold temperatures to prompt another draw in stockpiles, which stand at 1,687 billion cubic feet.
The EIA said Tuesday it expects natural gas inventories to end the summer injection season at 3,793 bcf--137 bcf below their end-of-summer level last year, when gas stockpiles hit an all-time record. Earlier in the year, prices cratered to their lowest level in more than 10 years on fears that the industry would run out of storage capacity.
Prices have recovered considerably, and the EIA raised its 2013 forecast for Henry Hub gas to $3.52 per million British thermal units, on average, up from last month's forecast for 2013 of $3.41. The increase follows a March that was 17% colder than agency forecasts.
FUTURES SETTLEMENT NET CHANGE
Nymex May $4.017 -6.5c
Nymex June $4.057 -6.1c
Nymex July $4.107 -6.0c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $4.035-$4.095 $4.165-$4.195
Transco 65 $4.03-$4.09 $4.1325-$4.18
Tex East M3 $4.18-$4.28 $4.33-$4.40
Transco Z6 $4.32-$4.55 $4.46-$4.60
SoCal $4.02-$4.13 $4.105-$4.19
El Paso Perm $3.9025-$3.95 $3.99-$4.035
Waha $4.03-$4.06 $4.09-$4.12
Katy $3.99-$4.075 $4.13-$4.20
Natural gas for May delivery settled 6.5 cents, or 1.6%, lower at $4.017 a million British thermal units on the New York Mercantile Exchange.
Futures were dragged lower as weather outlooks called for above-normal temperatures across the East Coast over the next two weeks, providing further support for the view that the chilly temperatures that persisted across the U.S. last month have likely passed.
More than half of all U.S. homes are heated with natural gas, and demand typically peaks in the winter as heating needs rise. Sustained cold through March has helped fuel a rally in natural gas prices in recent weeks, helping push prices above $4 for the first time since September 2011.
Recent forecasts suggest that springtime temperatures are likely to squelch the rally--at least for now. Private forecaster Commodity Weather Group said it sees temperatures climbing to the 80s in the coming two weeks.
However, it warned of a "widespread cool surge" in the Plains states over the next six to 10 days, which could prompt lingering heating needs. Still, the impact of below-normal weather forecasts is likely to diminish as spring progresses and overall normal temperatures climb.
"The last shot of cold is also just delaying the inevitable end of winter, and the further we get out of March, the less ... colder-than-normal temperatures are a factor, which is probably why the market is brushing them off," said Aaron Calder, analyst at Gelber & Associates, in a report.
Traders will get further guidance on natural-gas demand on Thursday when the Energy Information Administration releases its weekly survey of gas stockpiles. Analysts widely expect the recent cold temperatures to prompt another draw in stockpiles, which stand at 1,687 billion cubic feet.
The EIA said Tuesday it expects natural gas inventories to end the summer injection season at 3,793 bcf--137 bcf below their end-of-summer level last year, when gas stockpiles hit an all-time record. Earlier in the year, prices cratered to their lowest level in more than 10 years on fears that the industry would run out of storage capacity.
Prices have recovered considerably, and the EIA raised its 2013 forecast for Henry Hub gas to $3.52 per million British thermal units, on average, up from last month's forecast for 2013 of $3.41. The increase follows a March that was 17% colder than agency forecasts.
FUTURES SETTLEMENT NET CHANGE
Nymex May $4.017 -6.5c
Nymex June $4.057 -6.1c
Nymex July $4.107 -6.0c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $4.035-$4.095 $4.165-$4.195
Transco 65 $4.03-$4.09 $4.1325-$4.18
Tex East M3 $4.18-$4.28 $4.33-$4.40
Transco Z6 $4.32-$4.55 $4.46-$4.60
SoCal $4.02-$4.13 $4.105-$4.19
El Paso Perm $3.9025-$3.95 $3.99-$4.035
Waha $4.03-$4.06 $4.09-$4.12
Katy $3.99-$4.075 $4.13-$4.20
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