Natural Gas Falls on Weather Forecasts Mild weather and robust production have pushed the market into oversupply this year By NICOLE FRIEDMAN Updated Dec. 7, 2015 1:42 p.m. ET http://www.wsj.com/articles/natural-gas-falls-on-weather-forecasts-1449503056 NEW YORK—Natural-gas prices dropped sharply Monday as forecasts for warm weather weighed on demand expectations.
Natural gas for January delivery recently fell 11.8 cents, or 5.4%, to $2.068 a million British thermal units on the New York Mercantile Exchange. Prices were on track for their lowest settlement since August.
Mild weather and robust production has pushed the natural-gas market into oversupply this year and pushed prices lower. Weather forecasts released Monday continued to show above-average temperatures in the next two weeks, at a time of year when demand for the heating fuel is typically robust.
“There is no sign of real demand out there from the weather side,” said Scott Shelton, broker at ICAP, in a note. “This is pretty much worst-case scenario.”
Natural-gas stockpiles are 6.7% above the five-year average for this time of year and near record highs. Even if the weather turns colder in early 2016, stockpiles could still be very high at the end of winter, sparking concerns that storage facilities could fill up during the summer, said Teri Viswanath, director of commodity strategy for natural gas at BNP Paribas SA.
“Right now the expectation is that we’re going to be ending [the winter] with an unmanageable level of...storage,” Ms. Viswanath said. “It looks like we’re running into a problem.”
Write to Nicole Friedman at nicole.friedman@wsj.com
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