Natural Gas Futures Edged Lower

U.S. natural gas futures edged lower on Wednesday after forecasts showed weather would remain less cold through late January, reducing heating demand. That followed a 5 percent decline for futures on Monday on expectations of warmer weather and a 5 percent gain on Tuesday on an outlook for colder temperatures. Looking ahead, meteorologists projected temperatures in January, February and March would be warmer than normal. 

That would also make the overall winter warmer than normal but not at last year's record levels. Changes in winter weather forecasts have caused massive swings in futures prices over the past month. The front-month fell 14 percent from Dec. 9 to Dec. 20 on warmer forecasts, rocketed up 23 percent to a two-year high of $3.994 by Dec. 28 on a colder outlook and plunged 22 percent by Jan. 9 on renewed predictions of warmer weather.

Thomson Reuters estimated U.S. gas demand would rise to 112.5 billion cubic feet per day this week due to the cold start to the week from 101.3 bcfd last week before falling to 93.1 bcfd next week, when temperatures are expected to moderate. Analysts forecast utilities pulled 144 billion cubic feet of gas from storage during the week ended on Jan. 6, the smallest draw for that week since 2012.

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Suhani Verma

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