Friday, December 26, 2014

"Natural Gas Futures Drop Below $3 for First Time Since 2012"

There's a lot of gas around.
January's $2.977 down 0.053.
From Bloomberg:
Natural gas futures slumped below $3 per million British thermal units for the first time since 2012 on speculation that record production will overwhelm demand for the heating fuel.

Futures have slid 29 percent this year, heading for the first annual decline since 2011, as mild weather leaves stockpiles at a surplus to year-ago levels for the first time in two years. Temperatures will be mostly above average in the eastern half of the U.S. through Dec. 30, according to Commodity Weather Group LLC.
“We haven’t seen a lot of cold weather this winter,” said Carl Larry, a Houston-based director of oil and gas at Frost & Sullivan. “The warmer it stays, the more pressure on natural gas. Gas production is not dropping and demand is not that high.”

Natural gas for January delivery fell 1.6 cents, or 0.5 percent, to $3.014 per million British thermal units as of 9:25 a.m. on the New York Mercantile exchange. Earlier, futures touched $2.98 per million Btu, the lowest since Sept. 26, 2012. Volume was 68 percent below the 100-day average for the time of day. 
In the absence of extreme weather, rising production will leave inventories at an all-time high above 4 trillion cubic feet by the end of October 2015, BNP Paribas SA said in a report Dec. 23. U.S. gas production may climb 5.5 percent this year to a fourth consecutive record, government data show.

Oversupplied Market
“This market continues to look oversupplied,” Aaron Calder, senior market analyst at Gelber & Associates in Houston, said by phone on Dec. 24. “We are seeing support at $3 but I would say that once we break that I think $2.70 is probably our lower technical target.”...MORE