Forexpros – Natural gas futures were little changed on Friday, as mild weather forecasts and concerns about growing U.S. inventories continued to dominate market sentiment.
On the New York Mercantile Exchange, natural gas futures for delivery in December settled at USD3.800 per million British thermal units by close of trade on Friday, dropping 3.5% over the week, the first weekly decline in three.
Industry weather group MDA Federal said Friday that it expected mostly milder-than-normal temperatures across the U.S. Northeast states over the next six-to-ten days.
Meanwhile, the Commodity Weather Group’s six-to-ten-day forecasts predict temperatures in the Northeast will be 3 to 5 degrees Fahrenheit (1.6 to 2.7 Celsius) above normal.
Weather service provider AccuWeather expected temperatures in the Northeast and Midwest to average above-normal from November 7 to November 11, with daytime highs ranging from the mid-50s to low-60s degrees Fahrenheit (10 to 15 degrees Celsius).
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts for late October and early November on heating demand.
However, prices remained supported after industry research group Baker Hughes said Friday that the number of active rigs drilling for natural gas in the U.S. last week fell by 27 to a two-month low of 907. It was the second decline in three weeks.
Natural gas traders closely watch the rig count to gauge supply growth. Despite the decline, current production levels are widely expected to lead to further gains in output. Many analysts believe the gas-rig count must decline to close to 800 to balance production with demand.
On Thursday, the U.S. Energy Information Administration said in its weekly supply report that natural gas storage in the U.S. rose by 78 billion cubic feet last week.
Analysts had expected U.S. natural gas storage to rise by 73 billion cubic feet. Supplies climbed by 67 billion cubic feet in the same week a year earlier, while the five-year average change is a buildup of 35 billion cubic feet.
Currently, 3.794 trillion cubic feet of gas is in storage, 5.6% above the five-year average, while the inventory shortfall relative to last year narrowed to just 0.4%.
U.S. inventories typically increase during the so-called “shoulder season”, the period in autumn after air-conditioning demand falls but before heating begins.
But this year’s increase, aided by unusually warm temperatures, offers a much larger cushion than in most years as winter approaches.
Elsewhere on the Nymex, light sweet crude oil futures for December delivery traded at USD94.42 a barrel by close of trade on Friday, climbing 0.95% on the week, while heating oil for December delivery was largely unchanged over the week, trading at USD3.079 per gallon by close of trade Friday.
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