Natural Gas Edges Lower on Warmer Weather Forecasts (UNG)

Yesterday natural gas futures and ETFs like United States Natural Gas (NYSE: UNG) advanced after the EIA released inventory data that showed a larger than expected draw of 17 bcf (vs 12 bcf expected). However, futures pared recent gains Friday as forecasters called for warmer weather. Despite the thaw, average temperatures could soon return to historical averages.

Commenting on the trend in New England, Genscape analyst Rick Margolin said, "The warmup will provide a brief respite from what has been a record high month of demand. Month-to- date demand in New England has averaged a five-year high of 2.61 Bcf/d. The previous high was set in 2012 at 2.57 Bcf/d, though, notably, this November’s daily average temperatures have been slightly warmer than November 2012."

"While average temperatures today and tomorrow should remain in the 30’s, highs on Monday are forecast to reach the 60’s versus the seasonal norm of 49. Genscape’s forecast for Monday’s demand is at 2.18 Bcf/d, down 0.36 Bcf/d week/week. Temperatures are forecasted to drop down near their historical averages mid-week next week, and should remain there for the rest of the month," he added.

Genscape estimates natural gas inventory will decline 121 bcf next week.

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