Tags: natural gas | market | weather | heating

Natural Gas Falls to 5-Week Low as Mild Weather Crimps Fuel Use

Wednesday, 15 October 2014 10:59 AM

Natural gas futures dropped to a five-week low in New York as seasonal weather was forecast to follow a shot of cold air in the U.S. East, limiting demand for the heating fuel.

Temperatures will be normal or higher across most of the country from Oct. 25 to Oct. 29, replacing below-average temperatures along the East Coast, according to Commodity Weather Group LLC. Gas stockpile gains last week probably topped the five-year average for the 26th straight week amid mild weather and record production, analyst estimates compiled by Bloomberg show.

“There’s not a lot of cool weather on the horizon,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “One of the problems that we have is that even though the weather looks slightly more constructive this morning, we are still seeing very strong daily injections,”

Natural gas for November delivery fell 3.2 cents, or 0.8 percent, to $3.784 per million British thermal units at 10:14 a.m. on the New York Mercantile Exchange after dropping to $3.764, the lowest intraday price since Sept. 8. Volume for all futures traded was 41 percent above the 100-day average. Futures are down 11 percent this year.

The high in New York City on Oct. 23 may be 56 degrees Fahrenheit (13 Celsius), 6 below normal, before rising six days later to 64, according to AccuWeather Inc. in State College, Pennsylvania. About 49 percent of U.S. households use natural gas for heating.

Limited Demand

“There will be some heating-related demand but based on the latest weather forecasts it will be below normal for the rest of October,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, wrote in a note to clients today.

Gas inventories in the lower 48 states probably rose 91 billion cubic feet last week, based on the median of 11 analyst estimates compiled by Bloomberg. Estimates ranged from increases of 78 billion to 106 billion. The five-year average gain for the period is 78 billion.

The U.S. Energy Information Administration is scheduled to release its weekly supply report tomorrow.

Storage levels have rebounded by 2.383 trillion cubic feet since dropping to an 11-year low in March, reaching 3.205 trillion in the week ended Oct. 3, the fastest pace in government data going back to 1994. A stockpile deficit to the five-year average narrowed to 11 percent from a record 55 percent during the period.

Production from the Marcellus shale will average 16.05 billion cubic feet a day in November, up 1.4 percent from this month and 19 percent from a year earlier, the EIA said yesterday in its monthly Drilling Productivity Report.

Pipeline projects scheduled to be completed over the next two weeks will increases shipping capacity from the Marcellus by 1.6 billion cubic feet a day, government data show.

“With sub-$4 pricing for the start of winter, the market seems to be pretty certain that we have sufficient supply,” said Viswanath.

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Natural gas futures dropped to a five-week low in New York as seasonal weather was forecast to follow a shot of cold air in the U.S. East, limiting demand for the heating fuel.
natural gas, market, weather, heating
Wednesday, 15 October 2014 10:59 AM
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