US Natural Gas Futures Sink to Four-Month Low on Warm Forecast

US natural gas futures closed down, ending at a fresh four-month low, as traders weighed warming outlooks stretching through the end of the month, decreasing demand for the heating fuel.

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“We are simply running out of time for a last winter cold shot,” said Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets.

While storage levels are currently below the five-year average, traders are pricing in the “erasure” of that deficit within two weekly storage reports, Eli Rubin, senior energy analyst at EBW Analytics Group, wrote in a Wednesday note to clients.

Futures for March delivery settled -2.0c, or -0.7%, to $3.011/mmbtu on Nymex, the lowest settlement since Oct. 17
- Prices fell as low as $2.92/mmbtu

Weather:

Above-normal temperatures were expected across the eastern half of the US through Feb. 22, with mostly normal weather expected the following week: Commodity Weather Group
See WHUT for a map of latest 6-10 day weather forecast: NOAA

Storage:

Gas inventories probably fell -146 bcf last week, based on median analyst estimates compiled by Bloomberg
- Five-year-average gas inventory change for the week ended Feb. 13 is -151 bcf
Stockpiles totaled 2.214 tcf as of Feb. 6, 5.5% below the five-year average
- EIA to report weekly storage data at 10:30am New York time Thursday

Daily BNEF Gas Data:

Lower-48 dry gas production on Wednesday ~114.1 bcf/day, or +9.0% y/y
Lower-48 total gas demand on Wednesday ~85.4 bcf/day, or -31.1% y/y
Dry gas exports to Mexico on Wednesday ~6.8 bcf/day, or -8.4% w/w
Estimated gas flows to LNG export terminals on Wednesday ~19.9 bcf/day, or +2.1% w/w