US natural gas futures rose on Thursday on cold weather forecasts, but the heating fuel finished the year down 19 percent, weighed by huge stockpiles. Gas futures on the New York Mercantile Exchange settled nearly 6 percent up for the day after weekly US inventory data showed another drawdown in gas stockpiles as homes and businesses turn on the heat for winter.
But concerns that gas in storage was near the record 4 trillion cubic feet hit in November led NYMEX gas futures to a second straight year of double-digit losses after a 32 percent decline in 2014. Even so, some traders said they were enthused by the return of volatility to the market in recent weeks, which allowed natural gas to live up to its tag as the "Wild West" of commodities, seeing daily price swings of 5 percent to 10 percent.
"In terms of volatility, we're finishing the year with a bang, and it looks like we'll continue swinging with the weather over the next couple of months, given how far we've fallen and how we'll price in protection from any coming cold," said John Kilduff, partner at energy hedge fund Again Capital in New York. The front-month gas futures contract on the New York Mercantile Exchange settled up 12.3 cents at $2.337 per million British thermal units after data on last week's gas consumption virtually matched estimates. For the year, the contract fell 55.2 cents. US utilities withdrew 58 billion cubic feet (bcf) of natural gas from storage during the week ended December 25, the government-run Energy Information Administration said. A Reuters survey of analysts had forecast a draw of 57 bcf.
NYMEX's front-month contract fell 7 percent on Wednesday. In the prior four sessions, it rose almost 26 percent as colder weather enveloped the United States. Balmy conditions lasting through most of fall pushed the market to 16-year lows earlier. MDA Weather Services said on Thursday its 6-to-10-day model showed the eastern half of the United States, a key market for natural gas-driven heating, trending cold again from warm patterns seen on Wednesday.
Thomson Reuters Analytics data showed 470 heating degree days for the next two weeks in the lower 48 US states, versus the norm of 461 for this time of year. Heating degree days, or the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 Celsius), are used to estimate demand to heat homes and businesses.
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