Natural gas is down 8 percent this week with Thursday’s more 2 percent decline.
The Energy Information Administration reported Thursday that natural gas stockpiles fell by 76 billion cubic feet last week (much higher than the expected 65 billion cubic feet analyst predicted).
“The cash market is down below $1.90 and that points to a record amount of gas in the ground,” said Gene McGillian, Tradition Energy analyst.
Natural gas futures initially rose as high as $2.09 per million British thermal units Thursday but have fallen since. Total stocks now stand at 3.88 trillion feet, up 514 billion from a year ago.
The decline is a result of the El Nino year we are experiencing which causes unusually warm weather during wintertime. According to The Weather Channel, at least 20 states had record temperatures in the past two weeks. The Gulf Coast has had the highest, falling between the 60s and 70s.
“There are questions as to whether the South will see cooler trends,” Bespoke Weather Services’ chief meteorologist Jacob Meisel said.
Natural gas heating demand will likely be so low that the drawdowns will once more be below the five-year average.
“If we push into another month of this weather, that will be basically three bearish seasons in a row,” said McGillian. “With production levels where they are, that’s why we’re going to be talking decade lows, and there’s a possibility we’re looking at that now.”
Article written by HEI contributor Aliyah Cole.