Gas futures on the New York Mercantile Exchange's Henry Hub settled at $3.71 per mmBtu on Friday, a 10 cent or 2.6% drop. This latest tumble comes as market participants expect unseasonably warm weather this winter.
Expected Warm Weather Affects Natural Gas Prices
Houston-based energy trading consultancy Gelber & Associates noted that natural gas prices have declined year-over-year, despite being up 50% just one month ago and 100% in the early fall. The consultancy added that prices would only rise if weather forecasts indicate colder temperatures in the coming weeks. Currently, there is little evidence of Arctic air entering the picture for at least the next couple of weeks, leading to the fewest gas-weighted degree days in the last five years.
Natural Gas Oversold
Despite the unseasonably warm weather, Gelber & Associates stated that natural gas is "technically and fundamentally oversold." Prices may rebound once bullish weather news emerges, but until then, "gas market bears are firmly planted in the driver's seat."
