TRD: U.S. GAS : Futures Drop on Forecasts of Warmer Weather
--Natural gas lower as warm temperatures are expected across much of U.S.
--Futures recently down 2.5 cents to $2.860/MMBtu
--Analysts see inventory builds in-line with five-year average
By Jerry A. DiColo
NEW YORK--Natural gas futures fell Monday as weather forecasts called for warmer temperatures across much of the U.S. for the first weeks of autumn, potentially limiting gas-fired heating demand.
Natural gas for October delivery fell 2.5 cents, or 0.8%, to recently trade at $2.860 a million British thermal units on the New York Mercantile Exchange.
Commodity Weather Group said Monday that warmer-than-normal temperatures are expected across the Midwest and East Coast over the next two weeks, keeping demand for heating "relatively low" for this time of year.
The forecast comes as the natural-gas market enters the so-called "shoulder season," the autumn period that sees a decline in demand as consumers and businesses turn off air conditioning but don't yet turn on their heating.
"We're not getting any frost yet or anything along those lines," said Bob Yawger, director of energy futures at Mizuho. "There's nothing in the 10-day forecast that implies we're going to get an out-of-the ordinary heating situation."
Without an earlier-than-normal bout of cool weather, analysts expect U.S. natural-gas inventories to increase in line with the five-year average builds after months of coming in below average.
And rising stockpiles will likely keep pressure on prices, which have dropped from recent highs above $3/MMBtu over the past two weeks.
Jim Ritterbusch, head of the trading advisory firm Ritterbusch and Associates, said he expects "a test of last month's lows in nearby futures within the next couple of weeks," which would mean declines to nearly $2.60/MMBtu
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.83/MMBtu, according to IntercontinentalExchange, compared with Friday's average of $2.7633/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $2.95/MMBtu, up from $2.8355/MMBtu Friday.
