Natural-Gas Futures Decline as Spring Temperatures Set In

Published: Apr 09, 2013

--Natural-gas futures drop for a second session

--Warm weather on East Coast is curbing demand for heating

--Chilly outlook for Plains states offers bullish cue

By Dan Strumpf 

NEW YORK--Natural-gas futures fell for the second straight session Tuesday, as mild-weather forecasts point to shrinking demand for the fuel in the near term.

Natural gas for May delivery recently fell 4.9 cents, or 1.2%, to $4.033 a million British thermal units on the New York Mercantile Exchange.

Private forecaster Commodity Weather Group said it expects above-normal temperatures across the East Coast over the next two weeks. The outlook reinforces the view that winter is all but over and demand for natural gas used for heating is on a downward path.

However, the forecaster said that a "widespread cool surge" is due in the Plains states over the next six to 10 days, which could put a floor under demand.

Tuesday's decline comes a day after futures shot to an intraday high of $4.18/MMBtu, the highest price since August 2011. Futures reversed course later in the session, but the establishment of a new high in the market is a bullish cue for investors, said Jim Ritterbusch, head of Ritterbusch and Associates, a trading advisory firm.

"We are leaving open the possibility of a further advance toward the $4.30 level by week's end following what is likely to be another supportive EIA storage figure on Thursday," he said in a report.

Analysts expect the Energy Information Administration to post another draw in natural-gas inventories on Thursday following last week's below-normal temperatures. Strong gas demand spurred by chilly March weather helped launch natural-gas futures to above $4 recently, with natural-gas stockpiles now back below the five-year average level for this time of year.

Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $4.05/MMBtu, according to IntercontinentalExchange, compared with Monday's average of $4.1791/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $4.45/MMBtu, down from $4.5073/MMBtu.

Write to Dan Strumpf at [email protected]