From the Wall Street Journal
Natural gas prices dropped to a two-month low Tuesday after weather forecasters removed almost all signs of frigid weather from the late-February forecast, a bad sign for heating-fuel demand.
Futures for March delivery settled down 6.3 cents, or 3.2%, at $1.903 a million British thermal units on the New York Mercantile Exchange, the lowest settlement since Dec. 22. Gas has fallen for five straight sessions and lost 11% during that period.
Weather reports are showing normal to far-above normal temperatures blanketing most of the country through March 1. About half of U.S. households use natural gas as their primary heating fuel, so a lack of winter cold often can drag prices lower.
“Prices are falling again today in response to further blowtorch weather forecasts for most of the remainder of February and the beginning of March,” said energy-advisory firm Gelber & Associates in a note.
The problem is worse this year because stockpiles are so high, analysts said. Prices already plummeted to an inflation-adjusted low in the history of Nymex trading late last year because of the combination of record-high production and tepid heating demand tied to unseasonably warm weather.
Many are predicting that without an extreme spell of cold and high heating demand, stockpiles will finish the winter at or near record levels, possibly causing a glut to linger deep into 2016. The latest forecasts would raise those expectations.
