Mother Nature Raps Natural Gas

On January 27, 2012 — No comments

Natural-gas futures fell sharply Thursday, halting a rally that had lasted all week, as traders focused on Mother Nature and the likelihood of weak demand for the remainder of the winter.

Futures fell despite a government report that showed a bigger-than-expected drop in natural gas inventories, implying higher demand for the fuel.

Market participants said such a big drawdown in stocks is unlikely to be repeated in the coming weeks, as continued mild weather likely keeps a lid on gas-fired heating demand.

“For the most part, that was a one-off shot,” said Kyle Cooper, managing director of IAF Advisors, of the inventory drop. “Mother Nature remains very, very bearish.”

Natural gas for February delivery settled down 12.4 cents, or 4.5%, at $2.605 a million British thermal units on the New York Mercantile Exchange.

Futures traded in a wide range Thursday, climbing as high as $2.803/MMBtu following the Energy Information Administration’s weekly inventory report. The report said natural gas inventories during the week ended Jan. 20 fell 192 billion cubic feet.

The figure was above the 176 billion-cubic-foot average draw anticipated by analysts polled by Dow Jones Newswires. It also topped the five-year average withdrawal of 173 billion cubic feet for the week.

The sizable decline was likely because of a recent bout of cold weather and increased use of natural gas by power plants, according to a report by analysts from Citigroup.

For the rest of the story visit, Mother Nature Raps Natural Gas