Natural gas tumbles 3rd week in row, down 17% on week

By Barani Krishnan

Investing.com -- Three weeks counting and natural gas is still tumbling.

America’s premier heating fuel fell 17% on the week and for a third straight week that erased more than 50% in total from the market’s value.

Gas futures’ benchmark February contact on the New York Mercantile Exchange’s Henry Hub settled at $3.71 per mmBtu, or metric million British thermal units, on Friday, down 10 cents, or 2.6%. For the week, the market was off 76.50 cents, or 17.1% to be precise.

The tumble came as market participants looked beyond the weekly draw in U.S. gas inventories reported by the Energy Information Administration, or EIA, to focus
on more unseasonable warmth expected for this winter.

“Remarkably, prices are now sitting at a year-over-year decline, which is an impressive change in sentiment in such a condensed period, given that NYMEX front-month futures were up over 50% just one month ago and up over 100% in the early fall,” Houston-based energy trading consultancy Gelber & Associates said in its daily note on natural gas.

Going forth, gas prices would only rise if weather forecasts indicated colder temperatures in the coming weeks, the consultancy said.

“Looking ahead to the next gas storage data report for the week ending January 6, preliminary 'market' estimates are hugely varied and are calling for a bearish storage report featuring a storage draw ranging from as little as 10 billion cubic feet to as much as 50 bcf,” Gelber said.

“Presently, there is little solid evidence of true Arctic air entering the picture for at least the next couple of weeks. As such, the Gas-Weighted Degree Days (GWDDs) for January 6-19 are the fewest for the period in the last five years.”

Notwithstanding the unseasonably warm weather now, gas was both “technically and fundamentally oversold,” it said.

“Prices are … prone to rebound once solidly bullish [weather] news emerges. Until that supportive news materializes, gas market bears are firmly planted in the driver’s seat,” Gelber added.