--Gas prices extend decline for third session
--Prices drop to two-week low on expectations for warmer weather
--Traders say the coldest part of winter is behind them
By Nicole Hong
NEW YORK--Natural gas futures plunged 4% to a two-week low Monday, extending declines from last week on expectations for warmer weather.
Private forecaster Commodity Weather Group predicts higher-than-normal temperatures in the Midwest and Northeast, both regions are heavy users of natural gas to heat homes Warmer temperatures translate in to less demand for the fuel.
In addition, CWG meteorologist Jason Setree said that after a brief cold period projected for the end of the week, temperatures are expected to stay above the 30-year average.
Traders have been selling natural-gas futures on the expectation that "the coldest part of winter is behind us," said Tom Saal, a broker at INTL Hencorp Futures. "Historically, this is the time of season where you have the coldest weather."
Natural gas for February delivery dropped 13.9 cents, or 4%, to recently trade at $3.316 a million British thermal units on the New York Mercantile Exchange.
After colder-than-normal weather pushed gas prices higher since early January, prices started to tumble last Thursday on forecasts for rising temperatures. Gas futures have fallen more than 6% in the past three sessions since warmer weather would lower gas demand and put pressure on prices.
Even the coldest temperatures in early January were unable to "boost storage withdrawals appreciably," said Jim Ritterbusch, an analyst at Ritterbusch & Associates, putting extra pressure on gas prices. U.S. gas inventories released last week showed gas storage was 12% above the five-year average, which means gas supply is still outpacing demand.
Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $3.2325/MMBtu, according to IntercontinentalExchange, compared with Friday's average of $3.4188/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $3.77/MMBtu, down from $10.911/MMBtu.
Write to Nicole Hong at [email protected]
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