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Natural-gas futures in New York dropped below $3 per British thermal units for the first time in more than two years as mild weather and rising production contribute to a growing U.S. stockpile surplus.
Gas fell as much as 1.2 percent in electronic trading after an Energy Department report yesterday showed a smaller-than- forecast stockpile decline in the week ended Dec. 23. Supplies fell 81 billion cubic feet to 3.548 trillion, compared with the five-year average drop for the week of 122 billion cubic feet. Inventories were 13.7 percent above the weekly average.
“We’ve seen that gas has been depressed for a while,” said Kevin Cabla, an analyst with Raymond James in Houston. “Three dollars is less of a technical support, it’s more psychological.”
Natural gas for February delivery fell 3.6 cents to $2.991 per million British thermal units, the lowest intraday price since the fuel traded at $2.911 on Sept. 14, 2009.
About 51 percent of U.S. households use natural gas for heating, according to the Energy Department.
Gas has been falling as production at U.S. shale formations gained. The department said in a separate report yesterday that gas output in the lower 48 states rose 1.4 percent to 71.28 billion cubic feet a day in October.
Drilling has slowed as gas prices weakened. The number of rigs drilling for gas has dropped 12 percent this year, according to data from Baker Hughes Inc. in Houston. The total rose 7 to 809 this week, a Baker Hughes report yesterday showed.
“You aren’t going to see any material change in gas prices until you drop at least another hundred rigs,” Cabla said. “The crux of our argument is that at least 800 U.S. rigs is still growing natural-gas supply and there is no incremental demand.” |
Commodities 
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