US natural gas futures traded within a few cents of unchanged Monday morning, the first trading day of 2016, as colder-than-normal weather forecasts for the next two weeks were little changed from Thursday. Front-month natural gas futures on the New York Mercantile Exchange fell 0.6 cents to $2.331 per million British thermal units at 10:24 am EST (1524 GMT).
Average spot prices in 2015 at the Henry Hub benchmark in Louisiana on the Intercontinental Exchange fell to $2.61, the lowest level since 1999. That was 40 percent below 2014's average. Prices in 2015 collapsed as drillers pulled record amounts of gas out of the ground for a fifth year in a row, while heating demand remained weak early in the winter due to the warming effect of the El Nino weather pattern, allowing storage levels to grow to record highs over 4 trillion cubic feet in November.
Traders, however, noted prices jumped more than 32 percent over the past two weeks as temperatures turned to a more seasonable cold and drillers temporarily reduced production to the lowest level since July 2014 due in part to flooding and well freeze offs. Utilities likely pulled over 100 billion cubic feet of gas from storage to keep homes and businesses warm during the cold weather last week, according to early analyst estimates. That would be the biggest withdrawal since March 2015 and compared with draws of around 116 bcf during the same week a year ago and a five-year average of 129 bcf.
Long-term however, speculators were betting the market would decline before rising much more with the most active options so far on Monday the $1.60, $1.95 and $2 March 2016 puts.