Natural gas futures slid for a third-consecutive session Wednesday as traders bet that mild weather in the coming weeks will curb demand for the heating and power-plant fuel.
Natural gas for June delivery settled 9.3 cents, or 2%, lower, at $4.577 a million British thermal units on the New York Mercantile Exchange.
Weather forecasts "aren't giving a consistent cooling or heating need in the next few weeks," said Gene McGillian, a broker and analyst with Tradition Energy in Stamford, Conn., leading traders to cash out as the market remains in spring's low-demand "shoulder season."
Gas use typically declines in the spring, as temperate weather leaves less need to heat or cool homes and businesses.
A burst of late-season heating needs and increased demand from the power sector had pushed gas futures to three-month highs late last week and again early Monday, but the market hasn't been able to hold those gains.
An unusually large amount of nuclear power stations were idled for maintenance in April, increasing gas use as gas-fired plants helped make up for the lost electricity generation. The outages added as much as 3 billion cubic feet per day to gas demand, according to Citi Futures Perspective analyst Tim Evans, an increase of about 15% compared with average power sector demand.
But with nuclear plants returning to service this month and weather forecasts suggesting mild weather across much of the country, the benchmark contract has ended lower for three consecutive days.
Gas "is running out of steam up here," said Sean Baker, a market strategist with Vision Financial Markets in Chicago, adding that sustained gains above $5/MMBtu are unlikely unless summer demand is much higher than expected.
Meanwhile, some traders are looking ahead to a weekly snapshot of U.S. natural gas stockpiles due out Thursday. The Energy Information Administration is expected to report that 67 billion cubic feet of gas was added to storage last week, less than the five-year average amid higher power sector demand because of nuclear plant outages.
The five year average build for the week ended April 29 is 78 bcf, and last year 83 bcf was added to storage.
The EIA's report is scheduled for release Thursday at 10:30 a.m. ET.
Three-consecutive weekly injections have come in below analysts' expectations, leading market participants to adjust their positions on the view that they may have been underestimating demand. The tighter-than-expected supply picture helped push futures higher in each of the last three weeks.