US GAS: Futures Settle 3.91% Lower At $4.595/MMBtu
11/06/2009 02:22PM
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NEW YORK (Dow Jones)--Natural gas futures finished lower Friday, driven by mild weather forecasts, signs of continued economic weakness and a glut of gas in U.S. storage.
Natural gas for December delivery on the New York Mercantile Exchange settled 18.7 cents lower, or 3.91%, at $4.595 a million British thermal units after reaching a low of $4.555/MMBtu earlier in the day.
Weather forecasts were pointing to moderate temperatures in the major gas-consuming regions over the next two weeks. The mild weather was expected to limit the demand for natural gas for heating.
"The warm Indian Summer pattern is persistent in the next ten days with some weakening in the 11-15 day," forecasters with Commodity Weather Group in Bethesda, Md., wrote in a note to clients Friday.
Frontier Weather, a Tulsa, Okla., private forecaster, was predicting above-normal temperatures for most of the continental U.S. east of the Rockies from Nov. 11 through Nov. 15. Frontier was expecting warmer-than-normal temperatures in West, northern Plains and upper Midwest from Nov. 16 to Nov. 20.
Gas futures were also pressured lower Friday by a Labor Department report Friday showing additional job losses in October, sending the unemployment rate to 10.2%, the highest since April 1983. Gas traders have been watching economic data closely for signs of a recovery that could boost energy demand.
Meanwhile, gas supplies are abundant. Total gas in storage as of Oct. 30 was 3.788 trillion cubic feet, 12.3% above the five-year average and 11.1% above last year's level. Unusually cold winter weather or a sharp uptick in economic activity will be needed to put a significant dent in inventories, according to analysts and traders.
"We have an abundance of supply, and manufacturing is still weak," said Larry Young, a trader with Infinity Futures in Chicago. "That's a downward driver for natural gas."
Gas producers continue to put rigs back into service, with prices still well above September's lows near $2.40/MMBtu. The number of U.S. gas rigs climbed to 734 this week, up six rigs from the previous week, according to data from oilfield-services company Baker Hughes Inc. (BHI).
-By Christine Buurma, Dow Jones Newswires; 212-416-2143; christine.buurma@dowjones.com