Investing.com - Natural gas prices plunged to a six-day low on Friday, extending steep losses from the previous session as traders continued to focus on mild winter weather and elevated inventory levels in the U.S.
On the New York Mercantile Exchange, natural gas futures for delivery in March settled at USD2.545 per million British thermal units by close of trade on Friday, losing 4.17% over the week. The contract expires at the end of Monday’s trading session.
Earlier Friday, prices fell to USD2.510 per million British thermal units, the lowest since February 16. Prices retreated nearly 5% in the final two sessions of the week.
Natural gas prices came under pressure Friday amid indications demand for the heating fuel will remain weak in the near-term after the Commodity Weather Group said that March was forecast to be 13.5% warmer than March of last year.
The private forecaster said it sees milder-than-usual temperatures across virtually the entire eastern half of the U.S. in March, with much of the warmth focused on the Midwest, a major gas-consuming region.
The U.S. National Oceanic and Atmospheric Administration release a similar outlook on Thursday, saying that it expected mostly above-normal temperatures in the eastern half of the U.S. from March 2-8.
On Thursday, the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. fell by 166 billion cubic feet last week. Analysts had expected U.S. natural gas storage to drop by 146 billion cubic feet.
Inventories fell by 102 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 145 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.595 trillion cubic feet as of last week, 41% above year-ago levels and 40% higher than the five-year average for this time of year.
Gas prices declined following the report, despite the larger-than-expected drawdown.
In recent weeks, traders have fallen into a pattern of bidding up futures ahead of the weekly inventories report only to sell contracts after the data release, regardless of the fundamentals shown in the inventories report.
Inventory withdrawals this winter are running nearly 510 billion cubic feet below average, or about 29%, due to the lack of heating demand this winter.
Last winter at this time, cold weather conditions led to a decline of more than 2 trillion cubic feet from U.S. storage to help meet the surge in heating demand.
In contrast, only 1.3 trillion cubic feet of storage gas has been burned this winter season, a 37% drop.
Most analysts now expect gas inventories to end the winter at a record high 2.215 trillion cubic feet, 43% above the five-year average and well above the previous record of 2.148 trillion cubic feet set in 1983.
Early withdrawal estimates for Thursday’s storage data range from a decline of 80 billion cubic feet to 104 billion cubic feet, compared to last year's drop of 85 billion cubic feet and the five-year average decline for the week of 118 billion.
Gas prices fell to USD2.319 per million British thermal units on January 20, the lowest since February 2002, before rebounding after a production-cut announcement by Chesapeake Energy sparked a massive short-covering rally.
Last week, Canada’s biggest natural gas producer, Encana, announced plans to cut gas production by as much as 600 million cubic feet per day in a bid to boost prices for the heating fuel.
However, market participants are reluctant to bet that prices will rise further amid a lack of production cut announcements from other major U.S. natural gas producers.
Traders said planned cuts so far were not enough to tighten a market seen oversupplied by as much as 3 billion cubic feet per day, or more than 4%.
Elsewhere on the NYMEX, light sweet crude oil futures for April delivery traded at a nine-month high of USD109.70 a barrel by close of trade on Friday, gaining 4.95% on the week, while heating oil for March delivery rallied 2.87% over the week to settle at USD3.306 per gallon by close of trade Friday, the highest since April 11, 2011.
On the New York Mercantile Exchange, natural gas futures for delivery in March settled at USD2.545 per million British thermal units by close of trade on Friday, losing 4.17% over the week. The contract expires at the end of Monday’s trading session.
Earlier Friday, prices fell to USD2.510 per million British thermal units, the lowest since February 16. Prices retreated nearly 5% in the final two sessions of the week.
Natural gas prices came under pressure Friday amid indications demand for the heating fuel will remain weak in the near-term after the Commodity Weather Group said that March was forecast to be 13.5% warmer than March of last year.
The private forecaster said it sees milder-than-usual temperatures across virtually the entire eastern half of the U.S. in March, with much of the warmth focused on the Midwest, a major gas-consuming region.
The U.S. National Oceanic and Atmospheric Administration release a similar outlook on Thursday, saying that it expected mostly above-normal temperatures in the eastern half of the U.S. from March 2-8.
On Thursday, the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. fell by 166 billion cubic feet last week. Analysts had expected U.S. natural gas storage to drop by 146 billion cubic feet.
Inventories fell by 102 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 145 billion cubic feet, according to U.S. Energy Department data.
Total U.S. natural gas storage stood at 2.595 trillion cubic feet as of last week, 41% above year-ago levels and 40% higher than the five-year average for this time of year.
Gas prices declined following the report, despite the larger-than-expected drawdown.
In recent weeks, traders have fallen into a pattern of bidding up futures ahead of the weekly inventories report only to sell contracts after the data release, regardless of the fundamentals shown in the inventories report.
Inventory withdrawals this winter are running nearly 510 billion cubic feet below average, or about 29%, due to the lack of heating demand this winter.
Last winter at this time, cold weather conditions led to a decline of more than 2 trillion cubic feet from U.S. storage to help meet the surge in heating demand.
In contrast, only 1.3 trillion cubic feet of storage gas has been burned this winter season, a 37% drop.
Most analysts now expect gas inventories to end the winter at a record high 2.215 trillion cubic feet, 43% above the five-year average and well above the previous record of 2.148 trillion cubic feet set in 1983.
Early withdrawal estimates for Thursday’s storage data range from a decline of 80 billion cubic feet to 104 billion cubic feet, compared to last year's drop of 85 billion cubic feet and the five-year average decline for the week of 118 billion.
Gas prices fell to USD2.319 per million British thermal units on January 20, the lowest since February 2002, before rebounding after a production-cut announcement by Chesapeake Energy sparked a massive short-covering rally.
Last week, Canada’s biggest natural gas producer, Encana, announced plans to cut gas production by as much as 600 million cubic feet per day in a bid to boost prices for the heating fuel.
However, market participants are reluctant to bet that prices will rise further amid a lack of production cut announcements from other major U.S. natural gas producers.
Traders said planned cuts so far were not enough to tighten a market seen oversupplied by as much as 3 billion cubic feet per day, or more than 4%.
Elsewhere on the NYMEX, light sweet crude oil futures for April delivery traded at a nine-month high of USD109.70 a barrel by close of trade on Friday, gaining 4.95% on the week, while heating oil for March delivery rallied 2.87% over the week to settle at USD3.306 per gallon by close of trade Friday, the highest since April 11, 2011.