U.S. gas: Waning demand weighs on futures

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Signs of waning autumn natural-gas demand sent futures slightly lower Tuesday, but a storm brewing in the Atlantic Ocean kept a floor under prices.

Natural gas for October delivery settled down 3.1 cents, or 0.8%, to $3.798 a million British thermal units on the New York Mercantile Exchange.

Futures finished lower in thin volume as market participants focused on the likely tapering-off of demand during the autumn "shoulder season." That period, which straddles peak summer cooling season and the winter heating season, typically features sluggish gas demand.

Weather forecasts, meanwhile, offered a mixed picture on temperatures in the coming weeks, dashing hopes that a late-summer spike in temperatures would boost gas-fueled cooling demand.

Private forecaster MDA EarthSat said it sees above-normal temperatures through much of the West over the next six to 10 days, but cooler-than-usual weather should prevail in the South during the same period.

"We're in a demand-neutral situation," said Pax Saunders, analyst at Gelber and Associates in Houston. "The heat in Texas is fading and the West is the only lingering cooling-demand" area.

Market watchers say prices are likely to remain under pressure in the coming weeks, barring an unusual bout of cold weather--triggering gas-fueled heating demand--or a storm in the Gulf of Mexico production area.

Market participants are monitoring a storm brewing in the South Atlantic, which could threaten Gulf Coast production if it escalates and heads northwest.

The National Hurricane Center said a westward-moving formation of "cloudiness and thunderstorms" has a 70% chance of becoming a tropical cyclone in the next 48 hours.

"The market appears to be attempting to insert some storm premium, but follow through buying interest above the $3.80 level has been limited thus far," said Jim Ritterbusch, head of the trade-advisory firm Ritterbusch and Associates in Galena, Ill.

Signs of waning demand, elevated production and a relatively mild hurricane season have kept gas futures under the psychologically significant $4/MMBtu marker in recent weeks. Futures hit a six-month low of $3.743/MMBtu on Monday before rebounding to finish slightly higher.

Prices could head even lower later this week if the Energy Information Administration reports a bigger-than-expected build in gas storage in its weekly inventory survey due Thursday.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


DewPoint 6110

The patented "DewPoint" technology enables commercial hay growers to bale hay anytime the crop is sufficiently dry, without the need ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Leads to Insight