U.S. Natural Gas Sees Biggest Weekly Drop Year-to-Date

Warm weather persists across much of the country, reducing demand for gas for heating, while unseasonable heat in California increases demand for gas for air conditioning. Supply in the South is also starting to increase.

U.S. natural gas futures are nearing their biggest weekly drop this year as warmer weather dampens demand towards the end of winter. March Henry Hub futures are currently trading 0.6% higher to $3.991/MMBtu on Nymex. The contract fell 1.3% to close at $3,959 on Friday. Prices for the coming months are down 13% this week, the most since December 3rd.

Despite the ongoing apparent downward pressure, gas inventories fell by 222 billion cubic feet last week, in line with analysts' expectations, as cold weather across much of the country led to increased usage, and production fell temporarily across much of the U.S. South. Above-normal temperature forecast for most of the U.S. on Feb. 16-20: NOAA. New York City could still get another snowfall this weekend as temperatures soar in Los Angeles.

The latest data from BloombergNEF:

Gas production ~95.7 bcm feet on Thursday, or +9.5% YoY; Gas demand is around ~89.8 bcm ft, or -15% YoY. Estimated gas flows to LNG export terminals ~12 bcm feet, or -5.3% WoW.