US natural gas futures slid over 3 percent on Friday, and ended the holiday-shortened trading week down more than 4 percent, as milder autumn weather was expected to curb any late-season demand for cooling or early-season demand for heat. "The natural gas market has turned lower based on a short-term cooling trend in temperatures that is undercutting cash market values, pulling the futures lower," said Citi Futures energy analyst Tim Evans.
Electronic natural gas trading was halted for about an hour early Friday due to a technical glitch, but trading resumed at 11 am EDT (1500 GMT.) A US Labour Department report showed jobs growth slowed sharply last month, setting the stage for the Federal Reserve to take new steps to stimulate the economy. Shut-in gas from Hurricane Isaac has also been returning to service over the past few days, with few reports of damage from the storm.
Isaac came ashore in south-eastern Louisiana on August 28, shutting more than 70 percent of offshore US natural gas production, or more than 3.26 billion cubic feet per day, for most of last week. By Friday only 19.4 percent, or 847 million cubic feet, of offshore gas production, remained off line, a government report showed.
Some traders said strong nuclear outages could help support gas prices over the low-demand, autumn "shoulder" period, but most expect futures to have a hard time breaking back above $3 per million British thermal units, the level at which gas loses much of its appeal over coal for power generation. Front-month October natural gas futures on the New York Mercantile Exchange slid 9.4 cents, or 3.39 percent, to settle at $2.682 per mmBtu. The contract fell for a third straight day.
October futures slid 11.7 cents, or just over 4 percent, in the four-day Labour Day holiday-shortened week. The nearby contract peaked at $3.277 in late July, its highest mark since December. Other months ended lower as well, with the November contract losing 7.7 cents, or nearly 3 percent, to finish at $2.833, and winter months dropping about 6 cents each.
In the cash market, weekend gas bound for the NYMEX delivery point Henry Hub in Louisiana lost 12 cents to $2.73. Late deals eased slightly to 2 cents over the front month contract, from deals done late Thursday at a 4-cent premium. Gas on the Transco pipeline at the New York citygate tumbled 29 cents on the milder weather forecasts to $2.80.
The National Weather Service's six- to 10-day outlook issued on Thursday called for mostly normal temperatures in consuming regions in the Northeast and Midwest and below-normal readings in Florida and along the West Coast. Above-normal readings were on tap for other parts of the West and in New England.
On the nuclear front, outages totalled 6,900 megawatts, or 7 percent of US capacity, on Friday, down from 8,200 MW out on Thursday and 8,500 MW out a year ago, but up from a five-year outage rate of 5,600 MW. A low-pressure system over the north-central Gulf of Mexico had just a 20 percent chance for further development in the next 48 hours, the National Hurricane Center said.