Futures decline as traders see high inventories lasting through March
--April gas futures recently down 2.8% to $2.529/MMBtu
--Analysts see further price declines unless producers curtail output
By Jerry A. DiColo Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Natural-gas futures fell Tuesday as traders worried that mild weather will keep heating demand from denting high U.S. supply levels.
Natural gas for April delivery fell 7.4 cents, or 2.8%, to recently trade at $2.529 a million British thermal units on the New York Mercantile Exchange. Tuesday's session was the first in which April stood as the front-month contract.
Gas prices fell as weather forecasts continue to signal that temperatures through the first half of March will remain higher than average in much of the U.S.
With U.S. gas stockpiles more than 40% higher than the five-year average, a warm end to the coldest months of the year suggests that gas-fired heating demand won't be strong enough to bring down those inventories.
"The market is coming to grips with the ending of a very warm winter," said Peter Beutel, head of energy-trading adviser Cameron Hanover. "Prices now seem poised to work lower."
Gas futures are down more than 15% in 2012, and have held below $3/MMBtu since mid-January.
Some producers have responded to low prices by cutting production, but many analysts say more output cuts will be necessary to put a floor under prices.