U.S. Gas Drops Most in Four Months as Heat Wave Seen Fading
U.S. Gas Drops Most in Four Months as Heat Wave Seen Fading
(Bloomberg) -- U.S. natural gas futures slid the most in four months on forecasts for milder weather that would curtail demand for the power-plant fuel after a hot spell last week.
Temperatures may be mostly below normal in the central U.S. and average on the East and Gulf coasts from June 24 through June 28, according to Commodity Weather Group LLC. Chicago’s high will probably be 74 degrees Fahrenheit (23 Celsius) on June 24, 8 below the usual reading, AccuWeather Inc. data show.
The specter of a cool summer is pummeling gas prices, which rose to a five-month high in May on speculation that sweltering conditions would erode a lingering stockpile glut. Though rising exports have boosted demand for the fuel, an extended stretch of mild weather would leave supplies above normal for the time of year as production from shale basins climbs, pressuring the market lower.
“The forecasts really aren’t looking good from a bullish standpoint,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. “It looks like one of the mildest springs we’ve seen in a while in terms of power sector demand, and there are signs that production is coming back.”
Gas for July delivery fell 14.3 cents, or 4.7 percent, to $2.894 per million British thermal units on the New York Mercantile Exchange, the most since Feb. 21. The settlement price was the lowest since March 7. Gas was the worst performer in the Bloomberg Commodity Index.
To contact the reporter on this story: Christine Buurma in New York at cbuurma1@bloomberg.net.
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Jim Efstathiou Jr., Stephen Cunningham
