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Bloomberg
Forecasts for a warm start to December are raising the specter of a third straight mild winter, sending US natural gas futures sliding the most since February. A midday update to the government’s Global Forecast System weather model maintained a “much too warm†pattern through December 6, despite a couple of cool shots across the northern tier of the country, according to NatGasWeather.com. The low in Chicago on Nov 29 may reach 40 degrees Fahrenheit, 12 above normal, according to
AccuWeather Inc.
After two balmy winters in a row, bulls are betting on cooler temperatures this time around to stoke heating demand and burn up gas stockpiles, which are already below normal for the time of year. While record exports of US gas to Mexico and overseas have boosted consumption, production from shale basins has also reached an all-time high, threatening to send prices tumbling if bone-chilling cold doesn’t materialize.
“It’s all about the weather,†Bob Yawger, director of futures division at Mizuho Securities USA Inc. in New York, said by phone. “You have no days where it’s at least significantly below normal†in the 15-day forecast.
Gas futures for December delivery sank 15.5 cents, or 5.2 percent, the biggest drop since Feb. 21, to settle at $2.813 per million British thermal units on the New York Mercantile Exchange. Volume nearly halved to just over 71,000. Prices dropped 9.2 percent this week, the biggest weekly decline since February.