The NYMEX April natural gas futures contract settled near $1.70/MMBtu on a bearish weather forecast and market angst regarding storage stocks.
The April contract settled at $1.711/MMBtu, down 8 cents, after trading in a $1.690/MMBtu to $1.737/MMBtu range. Monday's close was about 44 cents below the 100-day moving average of the front-month NYMEX close of $2.17/MMBtu.
On the heels of last week's Energy Information Administration storage report, which showed an unexpectedly low pull from stocks, traders have begun looking toward the reality of an earlier-than-normal injection season.
In a mid-morning energy futures commentary e-mail, Citi Futures Perspective analyst Tim Evans said "given the current weather forecast, we anticipate below-average storage withdrawals in the weeks ahead, with a somewhat earlier-than-normal swing to storage injections."
The six- to 10-day National Weather Service outlooks calls for a high probability of above-average temperatures across most of the continental US, with a small ridge of normal temperatures stretching from western Pennsylvania south and east to the Southeast coast through Florida. Below-average temperatures were expected in parts of New England.
The eight- to 14-day forecast turned even more bearish, with most of the US seeing above-average temperatures and only a limited area of the Southwestern part of the country showing normal temperatures.
Prices could fall even further, with hefty storage volumes, strong production and lackluster demand leaving the market seeking a bottom, Gene McGillian, senior analyst with Tradition Energy, said in an interview.
