Breaking News

Natural gas futures plunge 7.5% on oversupply fears, mild weather

CommoditiesJan 31, 2012 10:47AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Investing.com - Natural gas prices plunged on Tuesday, falling to a six-day low after official data showed that U.S. gas production rose to a fresh record last month, while mild weather forecasts further dampened sentiment on the heating fuel.

On the New York Mercantile Exchange, natural gas futures for March delivery traded at USD2.524 per million British thermal units during U.S. morning trade, plummeting 6.97%.   

It earlier plunged by as much as 7.56% to trade at USD2.508 per million British thermal units, the lowest since January 23.

Natural gas futures came under pressure after the U.S. Energy Information Administration said that gas output from the lower 48 U.S. states rose by 1.3% in November to a record 72.61 billion cubic feet from 71.69 billion in October.

Total U.S. output gained 2.7% to 82.7 billion cubic feet a day as production in Alaska rose 14%.

In a research note, Barclays Capital called the new figures "stunning."

Official supply data released last week showed that U.S. gas inventories remain at their highest level ever for this time of year. Total U.S. natural gas storage stood at 3.098 trillion cubic feet as of last week, 20.7% above year-earlier supplies and 21.4% above the five-year average, the most since June 2009.  

Meanwhile, the U.S. National Weather Service said earlier that it expected above-normal temperatures over most parts of the U.S. west and northwest during the next six to 10 days.

In addition, industry weather group MDA EarthSat said "the forecast has taken a major warm shift," and that predictions for below-normal temperatures in the U.S. northeast as far out as Valentine's Day were weakening.

This is typically the coldest time in winter, but temperatures in the U.S. have yet to reach levels cold enough to boost demand for the heating fuel, keeping prices depressed at unseasonably low levels.

Last week, gas prices fell as low as USD2.319 per million British thermal units, the lowest since February 2002, before rebounding after production-cut announcements by major U.S. natural gas producers sparked a massive short-covering rally.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March climbed 1.15% to trade at USD99.94 a barrel, while heating oil for March delivery added 0.88% to trade at USD3.064 per gallon.

Natural gas futures plunge 7.5% on oversupply fears, mild weather

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post also to:
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Please wait a minute before you try to comment again.
Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Add Chart to Comment
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.