US natural gas futures fell on Friday and ended the week 4 percent lower as utilities refill storage at a record pace and weather forecasts call for some cooler weather and weaker demand in the eastern part of the country next week. "US weather models have been predicting hotter weather on the horizon for the last four weeks and have been wrong each time," said Aaron Calder of Gelber & Associates.
Front-month natural gas futures on the New York Mercantile Exchange slid for a third day, settling down 5.3 cents, or 1.1 percent, at $4.531 per million British thermal units, the lowest in a week. The July NYMEX contract traded early at $4.61 per mmBtu then fell throughout the session managing to hold above technical support at $4.50 per mmBtu. It fell 20.8 cents, or 4.4 percent, for the week, but remained up 7 percent for the year.
The overall low level of storage may keep the contract above $4.50, but "weather-minded traders are likely waiting until heat actually materialises before buying up the contract," Calder said in a note. Utilities added 113 billion cubic feet of gas into storage, a record sixth consecutive weekly injection above 100 bcf, the US Energy Information Administration said Thursday. The build beat analysts' expectations for 110-bcf build in a Reuters poll and historical averages. It was the ninth increase in a row above the five-year average.
Total gas in storage was at 1.719 trillion cubic feet, an 11-year low for mid-June. MDA Weather Services forecast cooler weather in the eastern United States over the next five days before hot weather returns in early July. The spread between gas and coal prices continues to make it economical for utilities to burn coal and nuclear outages are running at half the level seen last year. Next-day gas at the Henry Hub, the benchmark US supply point, fell 14 cents to average $4.51 per mmBtu on the IntercontinentalExchange. In New York, gas fell 55 cents to average $2.39 per mmBtu, the lowest in two years, on mild weather. In the West, gas at the SoCal Border slid 12 cents to $4.64 per mmBtu.
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