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Natural gas futures - Weekly review: June 13-17

Published 06/19/2011, 10:38 AM
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Investing.com – Last week saw natural gas futures fall sharply, dropping to a four-week low on Friday as prices were pressured by rising U.S. supplies and a mild weather outlook that was expected to limit demand for the fuel.

On the New York Mercantile Exchange, natural gas futures for delivery in July settled at USD4.340 per million British thermal units by close of trade on Friday, plunging 9.5% over the week.

It earlier fell to USD4.319 per million British thermal units, the lowest price since May 26.

Natural gas prices plunged nearly 3.1% on Thursday after the U.S. Energy Information Administration said natural gas inventories rose by 69 billion cubic feet last week, above expectations for a buildup of 67 billion cubic feet.

Total U.S. natural gas storage stood at 2.256 trillion cubic feet. Stocks were 275 billion cubic feet less than last year at this time and 76 billion cubic feet below the five-year average of 2.332 trillion cubic feet for this time of year.

On Friday, gas prices extended losses to hit a four-week low after the Commodity Weather Group said that it expected late-June temperatures in the U.S. Midwest, East and South to "underperform" the significant heat seen in the first half of the month.

Weather service provider AccuWeather said that New York was expected to have a seasonally normal high of 79 degrees Fahrenheit (26 Celsius) on June 22. The city had a high of 95 degrees on June 9.

Moderating temperatures across most parts of the U.S. over the past week have weighed heavily on prices, after an early-June heat wave boosted futures to a ten-month high of USD4.961 per million British thermal units.

Also Friday, industry research group Baker Hughes said that the number of active rigs drilling for natural gas in the U.S. last week fell 1% to 870.

Despite the decline, gas rigs were at a level widely expected to lead to further production gains.

On Monday, natural gas prices fell sharply after influential Wall Street bank Goldman Sachs advised investors to lock-in trading profits before the gas market reverses.

The lender said in a report that, “demand for natural gas will likely diminish in the coming weeks as the weather normalizes and nuclear power plants come out of maintenance.”

Elsewhere, light sweet crude oil futures for July delivery traded at USD93.00 a barrel by close of trade on Friday, dropping 5.85% over the week, while heating oil for July delivery traded at USD2.984 a gallon, slumping 3.65% over the week.

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