US natural gas futures fall 2.5 percent

US natural gas futures fell 2.5 percent on Monday on doubts about heating demand despite forecasts for colder weather across much of the country for the first time this winter. Gas futures have been on a roller-coaster ride since the November 23 US Thanksgiving Day holiday because of daily changes in weather forecasts.
Front-month gas futures fell 7.6 cents or 2.5 percent to settle at $2.985 per million British thermal units. The front month rose almost 9 percent last week, the biggest weekly gain since last December. Over the prior two weeks, the contract declined, including 9 percent in the week ended November 24.
"The market is tired of the forecasts and probably waiting for the real weather to show up," said Thomas Saal, senior vice president of energy at INTL FCStone in Miami. "Right now the weather is moderate. That's probably one reason prices are coming off. Historically, for the past two months, prices have kind of averaged around $3. We are probably where we should be until we get the cold weather."
Thomson Reuters boosted its projection for this week's US gas consumption to an average of 94.4 billion cubic feet per day from 86.1 bcfd on Friday on forecasts for more heating demand than previously expected. With temperatures expected to fall further in mid-December, projected demand will reach an average of 114.8 bcfd in two weeks. That compares with forecast usage of just 85.8 bcfd during the mild weather last week.
Analysts said utilities probably pulled just 17 billion cubic feet of gas from storage during the week ended on December 1, the smallest draw for that week since 2006. That compares with a year-earlier withdrawal of 43 bcf and a five-year average decrease of 69 bcf for that period.
If the latest weekly decline meets the estimate, it will leave stockpiles at 3.676 trillion cubic feet, or about 1.5 percent below the 3.731 tcf five-year average for this time of year. Even though the amount of gas in storage is less than usual for this time of year, some traders said that should be more than enough fuel to meet demand this winter, especially if production remains near record highs and the latest weather forecasts for the full season are correct.
The National Weather Service projected temperatures would be slightly higher than normal in December, January and February across much of the country, but lower than the previous two winters, which were among the warmest on record.