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NEW YORK (Dow Jones)--Natural gas futures slid Tuesday as traders took the expiration of the April contract as an opportunity to cash out and profit from the market's recent moves higher.
Natural gas for April delivery settled 13.4 cents, or 3.1% lower, at $4.24 a million British thermal units. The contract expired at settlement.
New front-month May gas settled down 18.5 cents, or 4.2%, at $4.263/MMBtu.
Natural gas had rallied sharply since early March, as expectations for a burst of cold weather and early-spring heating demand and worries about global fuel stockpiles following the Japanese crisis, pushed prices higher. But with the bulk of the chill expected to lift from the northern U.S. next week, traders Tuesday were eager to cash out in a bet that the advance had run out of steam.
"We've been rallying for two straight weeks," said Rich Ilczyszyn, a senior market strategist with Chicago-based Lind-Waldock. "People are booking some profits today."
While the cold weather across major heating markets in the northern tier of the U.S. is seen lingering through this week, traders said the market has likely priced in the lift to heating needs in rising by more than 5% during each of the past two weeks.
Gas prices typically come under pressure at this time of year, when winter's heating needs subside but summer's boost to gas power-generation demand has yet to arrive.
Colder-than-normal temperatures are expected from the Midwest through much of the East Coast through the end of this week, with milder weather across most of the country the following week, private forecaster Commodity Weather Group said.
Meanwhile, robust U.S. gas production continued in January, though at a slower pace than the previous month as freezing weather led to equipment failures at some gas fields.
U.S. natural gas production in the lower 48 states fell 0.5%, to 66.67 billion cubic feet a day, the first decline in three months, but was still up 6.8% from year-earlier levels, the Energy Information Administration said Tuesday. December's production figure was revised slightly higher, to 67.01 Bcf a day.
The decline was led by a 7.8% drop in production from New Mexico, as unusually frigid temperatures in the Central and Southwestern U.S. late in the month halted some output.
North American production during the first half of the year is widely expected to outpace demand, as drillers continue to exploit shale rock formation despite low prices.
Natural gas for April delivery settled 13.4 cents, or 3.1% lower, at $4.24 a million British thermal units. The contract expired at settlement.
New front-month May gas settled down 18.5 cents, or 4.2%, at $4.263/MMBtu.
Natural gas had rallied sharply since early March, as expectations for a burst of cold weather and early-spring heating demand and worries about global fuel stockpiles following the Japanese crisis, pushed prices higher. But with the bulk of the chill expected to lift from the northern U.S. next week, traders Tuesday were eager to cash out in a bet that the advance had run out of steam.
"We've been rallying for two straight weeks," said Rich Ilczyszyn, a senior market strategist with Chicago-based Lind-Waldock. "People are booking some profits today."
While the cold weather across major heating markets in the northern tier of the U.S. is seen lingering through this week, traders said the market has likely priced in the lift to heating needs in rising by more than 5% during each of the past two weeks.
Gas prices typically come under pressure at this time of year, when winter's heating needs subside but summer's boost to gas power-generation demand has yet to arrive.
Colder-than-normal temperatures are expected from the Midwest through much of the East Coast through the end of this week, with milder weather across most of the country the following week, private forecaster Commodity Weather Group said.
Meanwhile, robust U.S. gas production continued in January, though at a slower pace than the previous month as freezing weather led to equipment failures at some gas fields.
U.S. natural gas production in the lower 48 states fell 0.5%, to 66.67 billion cubic feet a day, the first decline in three months, but was still up 6.8% from year-earlier levels, the Energy Information Administration said Tuesday. December's production figure was revised slightly higher, to 67.01 Bcf a day.
The decline was led by a 7.8% drop in production from New Mexico, as unusually frigid temperatures in the Central and Southwestern U.S. late in the month halted some output.
North American production during the first half of the year is widely expected to outpace demand, as drillers continue to exploit shale rock formation despite low prices.
