Feb. 1 (Bloomberg) -- Natural gas futures declined for the first time in three days as forecasts showed milder weather later this month, reducing demand for the heating fuel.
Gas dropped 1.7 percent as companies including MDA Federal Inc.’s EarthSat Energy Weather in Rockville, Maryland, predicted temperatures will be in a normal range across much of the country from Feb. 11 to Feb. 15. The weather was colder than normal in the eastern U.S. in January.
“If we are looking at normal weather in 11 to 15 days, it would be a major change from what we’ve been seeing,” said Peter Beutel, president of trading advisory company Cameron Hanover Inc. in New Canaan, Connecticut. “It would definitely bring some selling into this market.”
Natural gas for March delivery fell 7.3 cents to settle at $4.347 per million British thermal units on the New York Mercantile Exchange. The futures have dropped 20 percent from a year ago.
The low temperature in New York on Feb. 14 will be 27 degrees Fahrenheit (minus 3 Celsius), 1 degree below normal, according to AccuWeather Inc. in State College, Pennsylvania. Columbus, Ohio, will have a low of 25 degrees, 2 degrees above normal.
About 52 percent of U.S. households use natural gas for heating, according to the Energy Department.
“We’re getting towards the point where there are only so many weeks of winter left,” said William Costello, an analyst with Westwood Holdings Group Inc. in Dallas. “People are kind of throwing in the towel.”
Snow began falling in Chicago at 4:30 a.m. local time today and the city may get close to two feet (61 centimeters), breaking a 44-year-old record. New York may receive 3 to 5 inches plus 0.3 of an inch of ice, according to Nelson Vaz, a National Weather Service meteorologist in Upton, New York.
Stockpile Decline
The Energy Department may report a larger-than-average withdrawal from gas inventories for last week in a report due on Feb. 3, according to the median of nine analyst estimates compiled by Bloomberg. The department may report a reduction in inventories of 186 billion cubic feet, compared with a five-year average drop of 165 billion, according to the estimates.
Gas inventories as of Jan. 21 totaled 2.542 trillion cubic feet, 1.2 percent above the five-year average and 0.4 above year-earlier levels, according to the Energy Department.
Manufacturing Report
U.S. manufacturing unexpectedly increased in January at the fastest pace since May 2004, reinforcing signs of strength in the economic expansion. The Institute for Supply Management’s factory index increased to 60.8 from 58.5 in December, the Tempe, Arizona-based group said today. Ratings greater than 50 signal growth.
Some gas traders track financial data for signs of an acceleration in the economy that would signal stronger fuel demand. Industrial consumers, such as factories and chemical plants, comprise about 28 percent of U.S. gas demand, according to the Energy Department.
Gas futures volume in electronic trading on the Nymex was 190,796 as of 2:44 p.m., compared with the three-month average of 291,000. Volume was 257,736 yesterday. Open interest was 829,213 contracts. The three-month average open interest is 792,000. The exchange has a one-business-day delay in reporting open interest and full volume data.