The NYMEX March natural gas futures contract continued its steady declineFriday, as forecasts of warmer weather and continued strong production weighedheavily on prices.
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The March contract settled at $2.584/MMBtu, down 11.3 cents fromThursday's close.
It has been a turbulent couple of weeks for the NYMEX front-monthcontract, as even in the face of a higher-than-expected storage withdrawal,the price continued to slide, falling to its lowest point since December 21.
Friday's plunge brings the total drop for the front-month contract to$1.047 over the past nine trading sessions, chopping its price 28.5% over thattime.
Kyle Cooper, principal at IAF Advisors, blamed Mother Nature for theMarch contract's woes, as forecasts for warmer weather and robust productionhave combined to put the "bearish sentiment [in the market] firmly in place."
"The market is counting winter out," he added.
Looking at the most recent six- to 10-day and eight- to 14-day weatheroutlooks from the US National Weather Service, warmer weather is likely formuch of the country, including the Northeast and its population centers of NewYork City and Boston, likely hindering any sort of demand surge towardmid-February.
Warmer weather is expected to lead to a drop in demand over the next twoweeks, with S&P Global Platts Analytics forecasting US demand to average 86.6Bcf/d through the next 14 days, compared with 97.3 Bcf/d in the previous sevendays.
Without the elevated demand seen by much of the US since the beginning ofFebruary, strong US dry gas production will have an opportunity to shine overthe coming weeks, as S&P Global Platts Analytics data projects US dryproduction will average 77.6 Bcf/d over the next 14 days, compared with 70.9Bcf/d in the year-ago period.
If the market is looking for support for prices, it may have to come fromincreased exports to Mexico or LNG feedgas requirements. So far in 2018,exports to Mexico have averaged 4.4 Bcf/d, compared with 4 Bcf/d the sametime a year ago, according to S&P Global Platts Analytics.
The expected addition of the Cove Point LNG facility in the near futurecould give demand a boost. LNG feedgas demand has averaged 3.2 Bcf/d so far inFebruary, compared with 2.1 Bcf/d in the year-ago period, S&P Global PlattsAnalytics data showed.
Cooper said some forecasters are calling for a cold snap toward the endof February and beginning of March, which could provide a late-season boost toheating demand before the market rolls into the shoulder season.
The NYMEX settlement is considered preliminary and subject to changeuntil a final settlement price is posted at 7 pm EST (2400 GMT).
--Eric Janssen, firstname.lastname@example.org
--Edited by Valarie Jackson, email@example.com