Natural gas retreats on milder weather forecasts
NEW YORK -- Natural-gas futures retreated Monday morning on relatively benign weather forecasts and lofty storage of the fuel. Natural gas for February delivery was off 8.1 cents, or 2.3%, to recently trade at $3.388/MMbtu on the New York Mercantile Exchange.
Weather in parts of the critical heating regions of the Midwest and the Northeast is currently at below normal temperatures. However, meteorologists see conditions warming, especially in the 11-15 day timeframe, according to private forecaster Commodity Weather Group.
"There's a lot of warmer changes on the way," said Matt Rogers, a meteorologist with CWG.
CWG's 11-15 day forecast does include cold weather in Canada and the Plains region that could ultimately spread east into critical heating regions in the U.S. But the forecast of such a shift is "low confidence" because it is still so far away, Mr. Rogers said.
Natural-gas stocks now stand nearly 13% above the five-year average for this time of year following recent weak supply withdrawals due to warm weather. The presence of such a huge stash of natural gas will weigh on prices until it is worked off due to cold weather.
"There's really no weather out there to take a lot of the surplus out," said John Woods, a trader at J.J. Woods Associates. Mr. Woods said the current cold weather "has already been digested" by the market.
Natural-gas stocks are currently also 2.3% above the level in the winter of 2011-12, which saw very little cold weather. Jim Ritterbusch, head of oil-trading advisory firm Ritterbusch and Associates, predicted that until this winter shows a supply deficit compared with last year's, "this market will likely remain entrenched in a choppy-sideways mode."
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $3.37/MMBtu, according to IntercontinentalExchange, compared with Friday's average of $3.403/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $15.50/MMBtu, up from $10.595/MMBtu.
Dow Jones Newswires