Natural Gas teardrop lower $3 for primitive Time Since 2012

Abhilash gaulati,manager,Agra,www.mcxbab.com

Natural gas slumped below $3 per million British thermal units in New York for the first time since 2012 on speculation that record production will overwhelm pursuit for the heating fuel.

Futures settled at the lowermost in 27 months and have dipped 26 percent in December, lemma for the biggest one-month drop since July 2008, as mild weather and record production erased a glut to year-ago levels for the first time in two years. Temperatures will be mostly above average in the eastern half of the U.S. amidst Dec. 30, according to Commodity Weather Group LLC.

“ anything scary in the forecast,” president of Schork Group Inc. a consulting group in Villanova, Pennsylvania. “You had this psyche where people were worried about a polar vortex; we had a cold October and a cold early November, and boom, if you were long you are wrong.”

Natural gas for January delivery fell 2.3 cents, or 0.8 percent, to settle at $3.007 per million Btu on the New York Mercantile Exchange. Futures touched $2.973, the lowest intraday price since Sept. 26, 2012. Volume was 54 percent below the 100-day average for the time of day at 2:32 p.m. Gas dropped 13 percent this week, a fifth straight weekly decline.

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Prices broke below several technical support levels, including $3.046 and then $3, and may be headed toward $2.80 or lower, said Schork.

“I am playing this market short,” he said. “Anyone who is selling now is trying to trigger a panic selloff.”

February $2.50 puts were the most active options in electronic trading. The price slipped 0.1 cent to 2.6 cents on volume of 557 as of 2:36 p.m.

Above-normal temperatures in the East this week will give way to mostly seasonal readings from Maine to Florida through Jan. 9, according to Commodity Weather in Bethesda, Maryland. The central states will see below-normal readings on Dec. 31 through the first week of January.

The high in New York tomorrow may be 50 degrees Fahrenheit (10 Celsius), 10 more than usual, data from AccuWeather Inc. in State College, Pennsylvania, show. Chicago temperatures may reach 46 degrees, 13 above normal.

An estimated 49 percent of U.S. households use gas for baking, led by the Midwest and Northeast, according to the Energy Information Administration.

“We haven’t seen a lot of cold weather this winter,” said Carl Larry, a Houston-based director of oil and gas at Frost & Sullivan. “The warmer it stays, the more pressure on natural gas. Gas production is not dropping and demand is not that high.”

In the absence of extreme weather, rising production will leave inventories at an all-time high above 4 trillion cubic feet by the end of October 2015,in a report Dec. 23.

lowered its estimate for average 2015 gas prices to $3.60 per million from $3.75.

“Unseasonably warm weather this month now necessitates extreme conditions ante in order to avert a surplus,” commodities strategy for the bank in New York, said in the report.

Gas stockpiles fell by 49 billion cubic feet to 3.246 trillion cubic feet in the seven days ended Dec. 19, below the five-year average withdrawal for the fourth straight week,data show.

Supplies were 150 billion, or 4.9 percent, higher than year-earlier levels. The surplus will “balloon to just shy of 200 billion cubic feet” by the start of next year.

Record-High Production

Production of the heating and power plant fuel expanded in 2014 to an all-time high for the fourth consecutive year, rising 5.5 percent to 74.26 billion cubic feet a day. Daily output will rise another 3.1 percent next year to 76.58 billion, marking a amongst of gains as technologies such as hydraulic annihilate, or fracking, made it more economic to extract fuel from shale rock.

The Marcellus formation in the East has emerged as the biggest driver of gas production growth in the U.S. Production from the shale formation may average 16.3 billion cubic feet a day in January, up 19 percent from a year earlier in its monthly Drilling Productivity rehearse on Dec. 8.

“This market continues to look oversupplied,” Aaron Calder, senior market analyst at phone on Dec. 24.