US GAS: Futures End Lower On Profit Taking, Weather
01/08/2010 03:05PM
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NEW YORK (Dow Jones)--Natural gas futures finished lower Friday, pressured by profit taking and forecasts of moderating temperatures in the U.S. Midwest and Northeast later this month.
Natural gas for February delivery on the New York Mercantile Exchange settled 5.7 cents, or 0.98%, lower at $5.749 a million British thermal units after reaching a low of $5.621/MMBtu earlier in the day.
Gas traders were offloading contracts to lock in profits after prices shot above the key $6/MMBtu level, the highest price since last January, on wintry weather earlier this week. Milder temperatures were expected in the major gas-consuming regions beginning late next week, reducing the demand for natural gas for heating.
"I think the market's running out of steam here," said Phil Flynn, an analyst with brokerage PFG Best in Chicago. "The market doesn't think it's going to be cold enough to make a substantial cut in supplies."
MDA EarthSat, a Rockville, Md., private forecaster, was predicting below-normal temperatures in the Northeast, Southeast, South Central region and parts of the Midwest from Jan. 8 to Jan. 12. Milder temperatures were expected later in January, however. National Weather Service forecasts were pointing to above-normal temperatures in the Midwest and parts of the Great Lakes region from Jan. 13 to Jan. 17, with warmer-than-normal temperatures extending into the Northeast the following week.
Gas inventories are abundant, with total gas in storage as of Jan. 1 at 3.123 trillion cubic feet, 11% above the five-year average and 10% above last year's level. Oilfield-services company Baker Hughes Inc. (BHI) reported Friday that the number of rigs drilling for gas in the U.S. rose to 781 this week, an increase of 22 over the previous week, as producers put rigs back to work in response to higher prices.
A U.S. Labor Department report showing a sizeable reduction in nonfarm payrolls in December also drove gas prices lower Friday. Gas traders have closely tracked economic data for signs of a recovery that would boost slumping energy demand.
Nonfarm payrolls fell by 85,000 in December, compared with a revised 4,000 gain in November. Economists had expected a payroll decrease of just 10,000.
FUTURES SETTLEMENT NET CHANGE
Nymex Feb $5.749 -5.7c
Nymex Mar $5.712 -4.4c
Nymex Apr $5.664 -4.0c
CASH HUB RANGE PREVIOUS DAY
Henry Hub $6.08-$6.88 $7.00-$7.75
Transco 65 $6.00-$7.10 $6.93-$8.10
Tex East M3 $9.75-$11.00 $8.75-$10.50
Transco Z6 $11.50-$16.00 $10.25-$11.75
SoCal $5.78-$6.31 $6.20-$7.80
El Paso Perm $5.70-$6.15 $6.86-$7.65
El Paso SJ $5.63-$6.15 $6.35-$7.55
Waha $5.90-$6.28 $7.18-$7.96
Katy $5.86-$6.79 $6.70-$8.10
-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com