Forexpros – Natural Gas futures prices plummeted, hitting new 28 month lows on warm winter forecasts and modest supply drop.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.688 per million British thermal units during early U.S. trade, giving back another 0.33%
Prices are trading below the psychologically critical USD3.00 level as bearish sentiment was elevated after the Commodity Weather Group stated that temperatures on the U.S. East Coast will likely remain mild, earlier in the week.
The weather group furthered the bearish environment by explaining that the period between November 1st to January 8th was the third warmest in the last century.
Natural gas futures have closely tracked weather forecasts in recent weeks. Above average temperatures decrease the need for gas fired electricity to heat dwelling and businesses, reducing the demand.
Speculation of increased supply via so called “super fracking” in the U.S. further depressed prices of natural gas futures.
Bank of America-Merrill Lynch cut its 2012 natural gas price forecast to USD3.30 BTU’s from the earlier estimate of USD4.30BTU’s.
The report added that prices were expected to fall below USD2.00 BTU by October, 2012.
Meanwhile, U.S. Energy Information Agency’s weekly report indicated that natural gas storage in the U.S. during the week ending January 6th fell by 95 billion cubic feet. Analysts expected U.S. gas storage to drop by 87 billion cubic feet.
Concerns that U.S. gas supplies are plenty to meet the needs of even a cold winter season depressed prices to 28 month lows recently.
Prices have given back more than 11% in the past week. So far in the first month of the year, natural gas is about 34% lower than year ago. .
Elsewhere on the NYMEX, light sweet crude oil futures for February settlement plunged 1.08% to trade to USD98.03 a barrel.
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