The NYMEX January natural gas futures contract settled at $1.990/MMBtu Friday, down 2.5 cents. A prompt-month contract has not settled lower since reaching $1.975/MMBtu on April 24, 2012.
The fall in the January contract comes as the market shrugged off Thursday's bullish gas storage report and instead focused on forecasts calling for above-average temperatures across much of the country in the coming weeks.
Henry Hub spot prices also took a hit Friday, falling nearly 14 cents to average $1.77/MMBtu on IntercontinentalExchange. Spot prices at the hub have not traded lower since November 30, 2001, when they reached $1.75/MMBtu.
"The temperatures right now are like spring. These are not heating degree days. Normally at this time of year we are talking about how deep the snow is. It's hard to find any support in a market when you have spring-like temperatures and come into winter with record storage," said Price Futures Group senior market analyst Phil Flynn.
"The warm weather is overshadowing the bigger than expected drawdown in storage," added Flynn.
US gas in storage fell 76 Bcf to 3.880 Tcf for the week ended December 4, according to the US Energy Information Administration Thursday. The withdrawal was above the consensus expectations of analysts, who had projected a pull of 59-63 Bcf.
"We have so much gas in the ground, it's driving prices down in search for a bottom. It does not appear that we have found it yet," said Tradition Energy senior analyst Gene McGillian.
The National Weather Service in its six- to 10-day outlook, released Friday afternoon, called for above-average temperatures to spread across the Eastern US and Upper Midwest. Below-average temperatures were expected across portions of the West.
According to data from Platts unit Bentek Energy, total US demand has averaged 78.9 Bcf/d month-to-date, a decline of 5.1 Bcf/d from the same period in 2014. Over the next seven days, demand is forecast to see only a small uptick, reaching an estimated average of 80.1 Bcf/d, as warm weather continues to weigh on heating demand.
Looking ahead to the eight- to 14-day range, the weather service forecast that unseasonable warmth would spread further west into the Midcontinent, while a smaller area of unseasonably cool temperatures was expected for portions of the West.
The January contract traded in a range of $1.959/MMBtu and $2.011/MMBtu.
The NYMEX settlement is considered preliminary and subject to change until a final settlement price is posted at 7 pm EST (2400 GMT).
