Bloomberg News

Natural Gas Futures May Decline Next Week on Mild Weather

November 30, 2012

Natural gas futures may fall next week as mild weather reduces heating-fuel consumption, a Bloomberg survey showed.

Eight of 14 analysts, or 57 percent, forecast that futures will decline on the New York Mercantile Exchange through Dec. 7. Four, or 29 percent, said gas will advance and two said prices will stay the same. Last week, 69 percent of participants said gas would gain this week.

Forecasters including Weather Services International Corp. in Andover, Maryland, predicted above-normal temperatures across the continental U.S. Dec. 4 through Dec. 8. Gas futures dropped 4 percent yesterday after the government reported an unexpected increase in stockpiles, as moderate weather replaced a cold spell earlier this month.

“Weather forecasts continue to be the chief culprit in keeping gas prices capped,” Mike Fitzpatrick, editor of the Energy OverView newsletter in New York, wrote yesterday. “The earlier seasonal rally clearly expressed overly optimistic expectations for initial heating demand. Good demand may still materialize, but the enthusiastic aspirations of participants need to be worked off.”

Natural gas declined 34 cents, or 8.7 percent, to $3.561 per million British thermal units this week in New York, the biggest weekly drop since the seven days ended June 1. Prices closed at a 13-month high of $3.901 a week ago and are up 0.3 percent from a year earlier.

Weather Forecasts

The high temperature in Philadelphia on Dec. 4 may be 64 degrees Fahrenheit (18 Celsius), 15 above normal, while Chicago may be 46 degrees, 7 above the day’s average, according to AccuWeather Inc. in State College, Pennsylvania.

Heating demand in the lower 48 states will be 41 percent below normal in the week ending Dec. 6, data from Weather Derivatives in Belton, Missouri, show. About 50 percent of U.S. households use gas for heating, according to the Energy Department.

Gas inventories rose 4 billion cubic feet in the week ended Nov. 23 to 3.877 trillion, the department said yesterday. The five-year average change for the week was a decline of 18 billion cubic feet. Analysts estimates compiled by Bloomberg showed an expected drop of 9 billion.

The gas survey has correctly forecast the direction of prices 49 percent of the time since its June 2004 introduction.

Bloomberg’s survey of natural-gas analysts and traders asks for an assessment of whether Nymex natural-gas futures will probably rise, fall or remain neutral in the coming week. This week’s results were:

RISE FALL NEUTRAL

4 8 2

To contact the reporter on this story: Naureen S. Malik in New York at nmalik28@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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