Natural gas tumbled the most in 15 weeks as revised forecasts showing an unusually warm start to December signaled reduced demand for heating fuels.
Futures dropped as much as 4.6 percent after companies including Commodity Weather Group LLC predicted above-normal temperatures for the lower 48 states over the next six to 10 days. Gas rose to a 13-month high last week after the Energy Department reported a bigger-than-expected inventory decline and forecasts showed colder weather in early December.
“A little bit of cold that we had is coming to a quick end,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “If the weather does turn out to be warmer than normal, we could see” more gas additions to stockpiles.
Natural gas for December delivery fell 14.6 cents, or 3.7 percent, to $3.755 per million British thermal units at 10:03 a.m. on the New York Mercantile Exchange after dropping 18.1 cents to $3.72 in the biggest intraday percentage decline since Aug. 10. Prices are up 6 percent from a year ago.
Matt Rogers, president of Commodity Weather Group in Bethesda, Maryland, said average temperatures from Dec. 1 to Dec. 5 may be 5 degrees Fahrenheit (2.8 Celsius) above normal in the East and in Maritime Canada. Temperatures may reach as much as 15 degrees higher across the Midwest, including Chicago.
“After cool conditions linger in the Midwest and East this week, a strong warm-up is still slated to expand across the nation,” Rogers said. “Highs across the Midwest and East should push into the 50s and 60s during the period, while Texas sees highs in the 70s and 80s.”
By Dec. 6, temperatures across the northern Great Plains and the South are expected to return to seasonal levels while remaining about 5 degrees above normal in the U.S. Northeast, Rogers said.
The low in New York on Dec. 3 may be 46 degrees Fahrenheit (8 Celsius), 10 above normal, according to AccuWeather Inc. in State College, Pennsylvania. The low in Chicago may be 39 degrees, 12 more than the usual reading.
Heating demand in the lower 48 states will be 53 percent below the seasonal norm from Dec. 2 through Dec. 6, data from Weather Derivatives, show. Demand was 18 percent below normal in the week ended Nov. 24, the Belton, Missouri-based forecaster said.
About 50 percent of U.S. households use gas for heating, according to the Energy Department.
U.S. gas stockpiles fell by 38 billion cubic feet in the week ended Nov. 16 to 3.873 trillion, the department said. The five-year average change for the week was a gain of 3 billion.
Inventories in the so-called producing region in the south- central U.S. were cut by 7 billion cubic feet because one or more producers reclassified supplies from working gas, or stockpiles available for delivery, to base gas, or supplies needed to maintain adequate pressure, the department said.
Supplies probably fell by 5 billion cubic feet last week, based on warmer weather, and may show small injections the following two weeks if temperatures don’t drop, Chirichella said.
The five-year average decline for the week ended Nov. 23 is 18 billion cubic feet. The department is scheduled to release its stockpile report for the week on Nov. 29.
While the market has gapped lower today, the uptrend for gas futures is intact as long as prices hold above the $3.50-to- $3.60 support level, Chirichella said.
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