US natural gas futures fell to 2-month lows on Thursday after a higher-than-expected draw of gas for heating last week failed to impress players more concerned about warmer weather in the near future. Front-month natural gas futures on the New York Mercantile Exchange settled down 9 cents, or 4.6 percent, at $1.852 per million British thermal units, after falling to $1.849 mmBtu, a level not seen since late December.
The US Energy Information Administration said utilities pulled 158 billion cubic feet of gas (bcf) from storage during the week ended February 12, one of the coldest phases of this winter. A Reuters poll of analysts had expected a draw of 154 bcf. NYMEX gas futures rose on Wednesday after falling in five previous sessions on worries that, historically, too little gas had been used for heating this winter due to the warming effects of the El Nino weather pattern.
While the 158 bcf draw cited by the EIA was above the 70 bcf drawn in the prior week and the 117 bcf consumed a year ago, it was still lower than the 170 bcf averaged over a five-year period, analysts noted. "With forecasts for mild temperatures ahead the overall bearish trend of below-average storage withdrawals is likely to continue," Tim Evans, energy futures specialist at Citi Futures, said in a note.
Both the US and European weather models show above-normal temperatures for the next two weeks. Heating demand has been about 12 percent below normal this winter due to El Nino effects. Meteorologists predict the situation will worsen in March, with heating seen at 24 percent below normal, according to Thomson Reuters Analytics. That warmer weather could result in higher-than-usual gas inventories by the end of March, when utilities traditionally start injecting the fuel back into storage for the next winter.
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