Natural gas marked a ninth day of declines on Monday as weather forecasting services kept pointing at cooler than normal temperatures across key consuming areas in the U.S., limiting demand for the fuel that is used for electricity generation.
On the New York Mercantile Exchange, natural gas for September delivery traded at $3.338 per million British thermal units at 13:55 GMT, down 0.28% on the day. Prices ranged between days high at $3.357 and low of $3.315 per Mmbtu, the lowest since February. The fuel fell 1% on Friday, an 8th consecutive daily decline, and settled the week 6.55% lower after plunging 5.2% the previous one.
Natural gas was pressured in the last couple of weeks and extended losses through Monday as weather forecasters continued to predict unusually mild temperatures in key consuming areas. According to Commodity Weather Group LLC in Bethesda, Maryland, the U.S. Northeast and Midwest will see below-normal seasonal temperatures between August 10 and August 19.
When above-normal temperatures are expected, natural gas surges as increased electricity demand to power air-conditioning calls for more supply of the fuel, which is used for a quarter of the U.S. electricity generation. Mild temperatures have the opposite effect.
Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut, said for Bloomberg: “We are not seeing strong heat. The making for a turnaround seems to be a little elusive right now. The market has priced in disappointing weather.”
Last week,the government agency said that during the week ending July 26, U.S. natural gas storage increased by 59 million cubic feet to 2 845 billion. This was 11.5% lower than the total amount of gas held in underground storage hubs in the same week a year earlier, which equaled 3 213 billion cubic feet. Last week’s figure was also 1.2% below the five-year average stockpiles, which stood at 2 879 billion cubic feet.
However, the government report underperformed expectations. According to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos., government statistics should have shown that natural gas inventories gained in a range between 54 billion and 58 billion cubic feet.
Market players will be focusing on this weeks EIA natural gas stockpiles report at 14:30 GMT on Thursday and any changes to the weather forecasting models.
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