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US GAS: Futures Fall On Mild Weather Outlook, Lower Crude Prices
admin - January 20th, 2010HOUSTON (Dow Jones)--Natural gas futures ended lower Wednesday as falling crude prices and mild weather forecasts weighed on the market.
Natural gas for February delivery on the New York Mercantile Exchange settled 6.1 cents, or 1.1%, lower at $5.496 a million British thermal units. The front-month contract fell as low as $5.464/MMBtu in earlier trading. Crude prices also slid Wednesday, pulling natural gas prices lower. Natural gas will sometimes move in tandem with oil, which can act as a bellwether for the economy and overall energy demand, analysts said.
At the same time, forecasters were predicting mild weather over the next few weeks, which can stifle demand for natural gas used to heat homes and businesses. The National Weather Service forecast for Jan. 27 to Feb. 2 calls for above-normal temperatures across the Northeast and in parts of the Midwest. Near-normal temperatures are expected in the Southeast.
"The weather is still bearish and there are still questions over the sustainability of the U.S. economy," said Stephen Schork, editor of the energy advisory newsletter The Schork Report.
The economic downturn has undermined demand for natural gas, particularly among industrial gas users. However, cold weather can boost demand and frigid temperatures last week are expected to result in a big draw from natural gas storage.
The U.S. Energy Information Administration is expected to report Thursday that natural gas storage levels for the week ended Jan. 15 declined by 217 billion cubic feet, according to the average of estimates in a Dow Jones Newswires Survey. A draw of that size would cut deeper into relatively high natural gas stockpiles.
Natural gas in U.S. storage for the week ended Jan. 8 stood at 2.852 trillion cubic feet, about 4% higher than last year and the five-year average.
Peter Beutel, the president of Cameron Hanover, a New Canaan, Conn., energy advisory firm, wrote in a note to clients on Wednesday that even a large draw may not make "huge changes" in the year-over-year surplus.
"Without new forecasts calling for cold temperatures, it is going to be difficult to break and sustain moves above $6," Beutel wrote.
FUTURES SETTLEMENT NET CHANGE
Nymex Feb $5.496 -6.1c
Nymex Mar $5.467 -6.9c
Nymex Apr $5.438 -6.1c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $5.44-$5.59 $5.47-$5.56
Transco 65 $5.45-$5.57 $5.43-$5.58
Tex East M3 $5.92-$6.00 $5.90-$6.05
Transco Z6 $6.04-$6.15 $6.03-$6.13
SoCal $5.55-$5.75 $5.57-$5.66
El Paso Perm $5.28-$5.45 $5.35-$5.45
El Paso SJ $5.24-$5.46 $5.36-$5.44
Waha $5.30-$5.44 $5.34-$5.46
Katy $5.35-$5.53 $5.36-$5.55
-By Jason Womack, Dow Jones Newswires
Natural gas for February delivery on the New York Mercantile Exchange settled 6.1 cents, or 1.1%, lower at $5.496 a million British thermal units. The front-month contract fell as low as $5.464/MMBtu in earlier trading. Crude prices also slid Wednesday, pulling natural gas prices lower. Natural gas will sometimes move in tandem with oil, which can act as a bellwether for the economy and overall energy demand, analysts said.
At the same time, forecasters were predicting mild weather over the next few weeks, which can stifle demand for natural gas used to heat homes and businesses. The National Weather Service forecast for Jan. 27 to Feb. 2 calls for above-normal temperatures across the Northeast and in parts of the Midwest. Near-normal temperatures are expected in the Southeast.
"The weather is still bearish and there are still questions over the sustainability of the U.S. economy," said Stephen Schork, editor of the energy advisory newsletter The Schork Report.
The economic downturn has undermined demand for natural gas, particularly among industrial gas users. However, cold weather can boost demand and frigid temperatures last week are expected to result in a big draw from natural gas storage.
The U.S. Energy Information Administration is expected to report Thursday that natural gas storage levels for the week ended Jan. 15 declined by 217 billion cubic feet, according to the average of estimates in a Dow Jones Newswires Survey. A draw of that size would cut deeper into relatively high natural gas stockpiles.
Natural gas in U.S. storage for the week ended Jan. 8 stood at 2.852 trillion cubic feet, about 4% higher than last year and the five-year average.
Peter Beutel, the president of Cameron Hanover, a New Canaan, Conn., energy advisory firm, wrote in a note to clients on Wednesday that even a large draw may not make "huge changes" in the year-over-year surplus.
"Without new forecasts calling for cold temperatures, it is going to be difficult to break and sustain moves above $6," Beutel wrote.
FUTURES SETTLEMENT NET CHANGE
Nymex Feb $5.496 -6.1c
Nymex Mar $5.467 -6.9c
Nymex Apr $5.438 -6.1c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $5.44-$5.59 $5.47-$5.56
Transco 65 $5.45-$5.57 $5.43-$5.58
Tex East M3 $5.92-$6.00 $5.90-$6.05
Transco Z6 $6.04-$6.15 $6.03-$6.13
SoCal $5.55-$5.75 $5.57-$5.66
El Paso Perm $5.28-$5.45 $5.35-$5.45
El Paso SJ $5.24-$5.46 $5.36-$5.44
Waha $5.30-$5.44 $5.34-$5.46
Katy $5.35-$5.53 $5.36-$5.55
-By Jason Womack, Dow Jones Newswires
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