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Natural gas posts worst quarterly drop of 50%; Bulls count on summer demand next
Natural gas posts worst quarterly drop of 50%; Bulls count on summer demand next By Investing.com
Breaking News
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Commodities 1 hour ago (Mar 31, 2023 03:21PM ET)
(C) Reuters.
By Barani Krishnan
Investing.com — U.S. natural gas prices experienced what appeared to be their biggest plunge in a quarter, handing bulls in the space a loss of more than 50% for the December to March period, as an unusually warm winter led to a huge inventory of the fuel used for heating.
Natural gas for May delivery settled at $2.216 per mmBtu, or metric million British thermal units, on the New York Mercantile Exchange’s Henry Hub — up 11.2 cents, or 5.3%, on the day.
For the week, the benchmark gas contract fell 6% while for the month, it lost 19%. Worst was the quarter, where it tumbled 50%.
The selloff in gas came amid weaker-than-usual demand for heating that has left 1.853 trillion cubic feet, or tcf, of gas in U.S. storage, the Energy Information Administration, or EIA, said in its latest inventory reading for the week ended March 24.
The current U.S. gas storage is 31% higher from the balance at the same time a year ago and 21% up versus the five-year average for storage, the EIA said.
The gas balance for 2023 is the highest in recent memory and remains the bane of bulls in the market who’ve been trying to restart a spectacular rally they enjoyed just months ago, before an unusually warm winter season led to less heating demand, sending excess gas supply into storage.
The path forward for gas bulls would be to hope for outsized summer demand that would lead to higher-than-usual storage draws of the fuel for cooling, said analysts.
Barring a scorching and long summer, “we still need a decent supply move downward this summer to facilitate balancing this market,” Eric McGuire, analyst at Wood Mackenzie, said in comments carried by naturalgasintel.com.
Natural gas posts worst quarterly drop of 50%; Bulls count on summer demand next
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