Natural gas futures decline as winter drawing to close
Natural gas futures decline as winter drawing to close
NEW YORK -- Natural gas futures declined Wednesday, giving back much of the week's gains as investors expect the onset of spring to begin curbing demand for gas used for heating.
Natural gas for April delivery settled 5.9 cents, or 1.7%, lower, at $3.470/MMBTU on the New York Mercantile Exchange.
Although weather forecasts continue to call for below-average temperatures during the next several weeks, only a few weeks remain to the peak winter heating demand season, leading investors to rethink recent gains.
"We know what supplies are, they're totally plentiful," said Tariq Zahir, managing member at Tyche Capital Advisors. "In order for natural gas to get above $3.50, $4, you've got to have something else out there--you need a fundamental reason for natural gas to go higher."
With roughly half of U.S. homes heated with natural gas, demand for the fuel typically peaks through the winter and pulls back in the spring.
Natural gas prices have rallied in recent weeks as a bout of cold weather has swept much of the country, spurring additional demand for heating. Strong demand is likely to persist in the coming weeks as a winter storm barrels through the Midwest to the Mid-Atlantic.
Market participants will get further insight on natural gas demand in Thursday's closely watched inventory report from the Energy Information Administration.
Analysts surveyed by Dow Jones Newswires expect a larger-than-usual 131 Bcf of gas were withdrawn from storage during the week ended March 1. The projected withdrawal is larger than last year's 92-Bcf draw in storage for the same week and is also greater than the 107-Bcf five-year average decline for that week.
If the storage estimate is correct, inventories as of March 1 will total 2.098 Tcf, 14% below last year's level, but 16% above the five-year average level for the same week.
Dow Jones Newswires