US GAS: Futures Ease On Mild Weather View; Fall 1% On Week
NEW YORK (Dow Jones)--Natural-gas futures fell Friday as moderating weather forecasts for some major gas-consuming markets cut the demand outlook for the heating fuel.
Natural gas for May delivery settled 2.7 cents, or 0.6%, lower, at $4.362 a million British thermal units on the New York Mercantile Exchange. Futures fell 1% on the week, snapping a streak of three consecutive weekly advances.
Forecasters expect the Midwest and Northeast cold weather that had given the market a boost to subside in the coming days, likely signaling an end to the late season burst of gas heating demand. Private forecaster MDA EarthSat sees warmer-than-normal temperatures across the Southwest through this weekend, with mostly normal weather elsewhere.
Temperatures for April 6-10 should be warmer than normal from the south-central U.S. through parts of the Midwest and mid-Atlantic, the private forecaster said Friday.
An unusually cold winter led to higher-than-normal heating demand, and U.S. gas stockpiles are set to emerge from withdrawal season at a much lower level than was anticipated last year, helping to ease some of the pressure on the U.S. market.
But strong drilling activity continues, making some traders wary of betting that gas prices will be able to hold on to gains. The number of rigs drilling for natural gas in the U.S. this week rose for the second consecutive week, oil field services provider Baker Hughes Inc. (BHI) said Friday. There were 891 rigs drilling for gas, up by 11 from the previous week.
Analysts have kept a close watch on the rig count for signs that producers are pulling back to limit supply growth. Rising production from U.S. shale rock formations has kept prices restrained at unusually low levels for much of the last two years, and the current pace of drilling is widely seen leading to further production gains.
Futures traded in positive territory earlier Friday, but pulled back as traders viewed the market's recent gains as an opportunity to sell. The benchmark contract had rallied sharply during the previous two weeks, supported by the cold weather and speculation that heightened scrutiny of nuclear power following the Japanese crisis would boost the appeal of gas as a power plant fuel.
The market is still likely in an upward trend, said Brian Habacivch, senior vice president of research at Louisville, Ky.-based energy management firm Fellon-McCord. Friday's losses "look like profit-taking at the end of the week," he added.
Gas futures ended higher Thursday, as traders looked past a larger-than-expected weekly build in U.S. inventories and focused on the likelihood that stockpiles would show a draw the following week
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