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NEW YORK (Dow Jones)--Natural gas futures slipped to 13-month lows Monday as high inventories and tepid demand continued to pressure prices lower.
Natural gas for November delivery settled down 10.4 cents, or 2.9%, at $3.431 a million British thermal units on the New York Mercantile Exchange, the lowest ending price since September 2009. The benchmark contract is down 30% since August, and has declined in nine of the last 11 weeks.
Gas prices typically rise at this time of year, supported by expectations of increased demand during the winter heating season. But high inventories have stifled rallies so far, as market participants settle into the mindset that supplies in the coming months will be more than ample.
"Right now, speculators are pushing this market downward," said Tom Saal, a vice president of energy trading at Hencorp Futures. "Buyers are probably waiting for something along the fundamental front" such as colder weather, before betting on rising prices, he said.
Noncommercial traders added to bets that gas prices would fall in the most recent Commodity Futures Trading Commission data. The CFTC said Friday that noncommercial traders increased their net-short position, or the difference between bets that prices will fall and bets that prices will rise, by 2.9% in the week ended Oct. 12.
Futures were also pressured Monday by the increasing likelihood that the remaining weeks of the Atlantic hurricane season will not disrupt Gulf of Mexico gas production.
"Essentially, the 2010 hurricane season is over for the Gulf energy production region," said Jim Rouiller, chief energy meteorologist with Planalytics. The Gulf is home to about 11% of U.S. gas production, and futures typically receive support during the heart of hurricane season on the expectation that some production will be shut in.
Despite bloated inventories and low gas prices, natural gas drilling activity remains strong. The number of gas-directed drilling rigs fell by five last week, to 966, according to oil-field services company Baker Hughes Inc., but the rig count is still up by about 34% from the same week last year as producers exploit natural gas-bearing rock formations known as shales.
Meanwhile, U.S. industrial production declined by 0.2% in September, the Federal Reserve said Monday. Capacity utilization also fell slightly, to 74.7%. Industrial users account for about a third of U.S. gas demand
Natural gas for November delivery settled down 10.4 cents, or 2.9%, at $3.431 a million British thermal units on the New York Mercantile Exchange, the lowest ending price since September 2009. The benchmark contract is down 30% since August, and has declined in nine of the last 11 weeks.
Gas prices typically rise at this time of year, supported by expectations of increased demand during the winter heating season. But high inventories have stifled rallies so far, as market participants settle into the mindset that supplies in the coming months will be more than ample.
"Right now, speculators are pushing this market downward," said Tom Saal, a vice president of energy trading at Hencorp Futures. "Buyers are probably waiting for something along the fundamental front" such as colder weather, before betting on rising prices, he said.
Noncommercial traders added to bets that gas prices would fall in the most recent Commodity Futures Trading Commission data. The CFTC said Friday that noncommercial traders increased their net-short position, or the difference between bets that prices will fall and bets that prices will rise, by 2.9% in the week ended Oct. 12.
Futures were also pressured Monday by the increasing likelihood that the remaining weeks of the Atlantic hurricane season will not disrupt Gulf of Mexico gas production.
"Essentially, the 2010 hurricane season is over for the Gulf energy production region," said Jim Rouiller, chief energy meteorologist with Planalytics. The Gulf is home to about 11% of U.S. gas production, and futures typically receive support during the heart of hurricane season on the expectation that some production will be shut in.
Despite bloated inventories and low gas prices, natural gas drilling activity remains strong. The number of gas-directed drilling rigs fell by five last week, to 966, according to oil-field services company Baker Hughes Inc., but the rig count is still up by about 34% from the same week last year as producers exploit natural gas-bearing rock formations known as shales.
Meanwhile, U.S. industrial production declined by 0.2% in September, the Federal Reserve said Monday. Capacity utilization also fell slightly, to 74.7%. Industrial users account for about a third of U.S. gas demand
