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Natural Gas Slides as Demand Remains Muted

–Natural gas slides as weather patterns keep demand muted

–EIA reported big jump in natural gas inventories

–Expiration book-squaring behind Thursday rally: analysts

By: Dan Strumpf |

Natural-gas futures headed lower Friday, as traders focused on weather patterns that suggest weakening demand for the fuel in the coming weeks.

Natural gas for November delivery recently declined 2.3 cents, or 0.6%, to $3.544 a million British thermal units on the New York Mercantile Exchange.

Futures declined a day after the Energy Information Administration reported an unexpectedly large rise in U.S. natural-gas stockpiles, suggesting demand for the fuel remains weak as benign weather curbs both air conditioning and electricity use and gas-fired heating demand.

The trend looks likely to continue through October, weather forecasters say. MDA EarthSat called for above-normal temperatures in the eastern U.S. and below-normal conditions in the West over the next six to 10 days, while conditions are likely to moderate in the five days afterward.

“Above-normal weather outlooks into October are set to delay higher levels of heating demand,” said Matt Smith, analyst at Schneider Electric, a commodity consulting firm.

The EIA on Thursday reported U.S. gas stockpiles rose 87 billion cubic feet to 3.386 trillion cubic feet last week, well above the 77-bcf rise forecast by analysts in a Wall Street Journal survey.

The report prompted a quick selloff after its morning release, but prices later recovered as traders closed out short bets ahead of the end-of-session expiration of the October futures contract.

“The benchmark futures contract rebounded sharply to end slightly in positive territory on expiration-related book squaring,” analysts at Tradition Energy wrote in a note to clients.