The NYMEX November natural gas futures contract tumbled 9.6 cents to a $3.67/MMBtu settlement Monday -- the lowest close in 11 months -- as the market considered forecasts calling for mild weather into November as well as new US gas production records set over the weekend.
The last time the prompt month settled below $3.70/MMBtu was exactly 11 months ago, when the December contract closed at $3.674/MMBtu on November 20, 2013.
"We're at 11-month lows and the market can't seem to pick its head up," said Gene McGillian, analyst at Tradition Energy.
Updated forecasts released Monday now are calling for mild weather to extend into the first week of November. The US National Weather Service's forecast map is predicting above-normal temperatures for all of the US in its eight- to 14-day outlook.
Such weather could dampen demand and allow the industry to continue chipping away at historic storage deficits on likely strong injections, analysts noted.
On the supply side, Platts unit Bentek Energy reported that US dry gas production hit a new record over the weekend, topping out Sunday at 70.5 Bcf/d.
McGillian said light trading volumes may have sustained the price drop as well. "We've fallen past $3.70[/MMBtu] support and next we may test $3.50[/MMBtu]" on our way to the bottom, he said.
"The bears are in control" until the weather changes, he added.
"The levels that held up since the end of July" were finally breached as mild weather continues, noted Elaine Levin, president of brokerage PowerHouse. "We also continue to watch other markets, like crude and distillates, and see weakness across all the energies," she added.
November traded Monday in a range of $3.663-3.745/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EDT (2300 GMT).
