Futures Pros – Natural gas futures were down for the first time in three days on Tuesday, tumbling to a two-day low after a government report showed that U.S. natural gas production rose for the fifth consecutive month in December.
On the New York Mercantile Exchange, natural gas futures for April delivery traded at USD3.910 per million British thermal units during U.S. morning trade, tumbling 3.21%.
It earlier fell to USD3.898 per million British thermal units, the lowest price since February 25.
Earlier in the day, the U.S. Energy Information Administration said in its monthly Short-Term Energy Outlook that U.S. gas production increased by 1.1% in December, exceeding expectations for an increase of 0.8%.
Output in the lower 48 states rose for a second month, increasing by 0.2%.
Global financial service provider Morgan Stanley said in a report that, “Gains in drilling efficiency have lowered the break-even cost for many producers, meaning output will likely remain high through much of 2011 despite depressed commodity prices.”
Meanwhile, weather service provider AccuWeather said that New York was forecast to have a low of 42 degrees Fahrenheit (6 Celsius) on March 9, nine degrees above normal.
Warmer-than-normal winter temperatures decrease the need for gas-fired electricity to heat homes, reducing demand for natural gas.
Approximately 52% of U.S. households use natural gas for heating, according to the U.S. Energy Department.
Elsewhere, light sweet crude oil futures for delivery in April jumped 1.59% to trade at USD98.42 a barrel, while heating oil for April delivery surged 1.58% to trade at USD2.981 per gallon during U.S. morning trade.
