US natural gas futures hit a more than two-year bottom below $3 on Friday, finishing the worst week in 10 months, as disappointing weekly draws of the fuel raised worries about growing supplies of gas in storage. NYMEX's front-month gas hit a September 2012 low of $2.9783 per million British thermal units before settling at $3.007, about half a percent below its close on Wednesday before Christmas.
The contract traded as high as $4.53 per mmBtu on November 26 due to colder weather then across the United States. US weather models run by Thomson Reuters and forecasts by MDA Weather Services show mixed trends in the near term. Thomson Reuters Analytics' models project 485 heating-degree days in the lower 48 US states over the next two weeks, as compared with the norm of 458 HDDs this time of year.
MDA Weather Services said its six- to 10-day forecast shows warmer risks to the East and Southeast from a potential storm, even as cold weather was possible in the North-Central and Rockies regions. Physical prices of natural gas have also fallen below key support this week as buyers held out for discounts. Next-day gas at Dominion South in Pennsylvania slipped this week to below $1 per mmBtu, its lowest since 2001, on weak demand and record production in the Marcellus Shale.
For the current week, NYMEX front-month gas was down 13 percent, the sharpest weekly decline since February. The selloff came after data from the US Energy Information Administration showed utilities drew 49 billion cubic feet of natural gas from storage last week. Analysts polled by Reuters had expected a 64-bcf draw, which itself would have been the lowest since 2006 for this time of year, according to EIA data.