Natural gas futures dropped to the lowest price in almost 10 years after a government report showed that a U.S. inventory surplus widened last week as mild weather reduced demand for heating fuels.
Gas fell 6.1 per cent after the Energy Department said stockpiles dropped 87 billion cubic feet in the week ended Jan. 13 to 3.29 trillion cubic feet. The five-year average decline for the week is 162 billion. A surplus to the five-year average grew to the widest in 31 months.
"It looks pretty bad right now," said Cindy Wexler, an independent gas trader on the floor of the New York Mercantile Exchange.
"It's going to take some time to undo this supply situation and that's going to pressure prices."
Natural gas for February delivery declined 15 cents to $2.322 per million British thermal on the New York exchange, the lowest settlement price since Feb. 25, 2002. Gas has fallen 22 per cent this month.
"At this point I don't think $2 is unreason-able," Wexler said.
