Natural gas futures fell in New York, reversing an earlier gain, amid revised forecasts for milder weather in late January that would reduce demand and a government report showing record production.
Gas slid as much as 1.5 percent after MDA Weather Services said a midday weather update showed warmer weather for the Midwest and the East over the next 11 to 15 days. Output in the contiguous U.S. states climbed 0.4 percent to a record 73.54 billion cubic feet a day in October from the previous month, according to the Energy Department’s monthly EIA-914 report.
“The market is holding out hope that colder weather at the end of January will salvage the heating season,” said Teri Viswanath, director of commodities strategy at BNP Paribas SA in New York. “The problem is the 11- to 15-day forecast turned warmer. Less heating demand than originally expected will mean slightly higher end-of-season storage levels. The 914 data is just affirmation that supplies are continuing to grow.”
Natural gas for February delivery dropped 4 cents, or 1.2 percent, to $3.247 per million British thermal units at 1:01 p.m. on the New York Mercantile Exchange. Trading volume was 32 percent below the 100-day average. Gas prices have risen 5 percent from a year ago.
April $2.50 puts were the most active options in electronic trading on the Nymex. They fell 0.4 cent to 0.9 cent on volume of 1,873 lots at 12:51 p.m. Puts accounted for 73 percent of the volume so far today.
The price spread of February futures to April contracts, representing cold-weather versus warm-weather months, widened 0.2 cent to 5.2 cents, increasing for the first time in three days.
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