US natural gas futures ended little changed on Friday on weather forecasts calling for continued warmer-than-normal temperatures that will keep heating demand low through the middle of December. Front-month gas futures on the New York Mercantile Exchange closed up 0.5 cent at $2.186 per million British thermal units. Traders noted the market so far remained unfazed by outlooks calling for easing production.
US production in the lower 48 states on Thursday fell below the same day a year ago for the first time since October 2013 as some Marcellus and Utica drillers have shut in production while they wait for prices in the region to rise or for pipelines to enter service to move their fuel to regions where prices are higher. Production on Friday was expected to ease to 73.2 billion cubic feet per day, the lowest level since mid-November, from 73.4 bcfd on Thursday, according to an early estimate by Thomson Reuters Analytics.
After falling to the lowest level in at least 28 years last week, Baker Hughes said US drillers this week added three gas rigs. Futures for the winter and all of 2016 have been depressed for much of this year, with production at record levels, storage at record highs and forecasts for a warmer-than-normal winter with lower-than-normal heating demand due to the El Ni?o weather pattern.
The calendar 2016 strip fell to a fresh all-time low around $2.40. That compared with an average of $2.68 so far this year and put calendar 2016 on track to fall to the lowest since 1999 when gas averaged $2.27. Calendar 2017 also dipped to a fresh all-time low at around $2.76. The premium of the February 2016 future over January 2016 climbed to a fresh all-time high. Some speculators bet that prices will fall further. Among the most active options were the $1.95 and $2 January and February puts. Open interest rates in the puts were near all-time highs.
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