US natural gas futures closed down a few cents after earlier dropping to an 11-month low as forecasts for much warmer-than-normal weather over the next two weeks offset a slightly smaller-than-expected storage build. Front-month gas futures on the New York Mercantile Exchange closed down 3.7 cents, or down 1 percent, at $3.622 per million British thermal units.
Next-day gas prices at Henry Hub, the benchmark supply point in Louisiana, Chicago citygates and Southern California Border also all fell to fresh 11-month lows of $3.60, $3.63 and $3.62, respectively, on the Intercontinental Exchange (ICE). The decline kept the NYMEX front-month in oversold territory for a second day in a row. The contract is now down 4 percent so far this week, 12 percent for the month and 14 percent year-to-date.
The US Energy Information Administration said utilities added 94 billion cubic feet of gas into storage last week, just off analysts' expectations for a 97-bcf build. Last week's build was the same as the prior week but was well over builds of 86 bcf in the same week a year earlier, and the five-year average of 70 bcf. MDA Weather Services forecast "near to record" warm weather in the US Mid-Continent over the next five days before the warmth spreads across the rest of the country next week.
US weather models also forecast warmer autumn temperatures over the next two weeks, with 165 heating degree days (HDDs), down from 176 earlier Thursday. The normal for this time of year is 185 HDDs, according to Thomson Reuters Analytics. Shares in the United States Gas Fund, an exchange traded fund that tracks Henry Hub gas prices, closed at a 10-month low of $19.52, down from $19.56 on Wednesday. On the NYMEX, the 12-month strip, the balance of 2014 and the winter of 2014 all fell to fresh 11-month lows.
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