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U.S. natural gas futures failed to sustain early gains Wednesday, succumbing to forecasts for milder weather in the first weeks of December, weighing on demand while U.S. production remains near record highs.
The upcoming EIA storage report is expected to show an above-average draw following colder than normal temperatures across the U.S. last week, but “the following 3-4 draws are expected to be lighter than normal due to recent and coming warmer than normal pattern to increase surpluses over 350B cf,” NatGasWeather.com said in a report.
Front-month Nymex natural gas (NG1:COM) for January delivery closed -5.2% to $2.569/MMBtu, its lowest settlement value since September 6.
ETFs: (NYSEARCA:UNG), (BOIL), (KOLD), (UNL), (FCG)
Shares of gas-focused producers fell broadly, including Range Resources (RRC) -5.6%, Comstock Resources (CRK) -4.9%, EQT (EQT) -3.8%, Antero Resources (AR) -3.4%, Chesapeake Energy (CHK) -3.2%, Coterra Energy (CTRA) -2.1%, Southwestern Energy (SWN) -1.2%.
The U.S. natgas market has been sending signals for weeks that many traders do not expect price spikes this winter due to record production and plenty of gas in storage, Reuters reported, with the biggest sign the collapse of the premium of March 2024 futures over April 2024 to a record low of just $0.01/MMBtu.
The industry calls the March-April spread the “widow maker” because rapid price moves on changing weather forecasts have forced some speculators out of business.