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US natural gas futures fall to 10-year low for 2nd day

11 April 2012 08:08 (UTC +04:00)

Baku - APA-Economics. U.S. natural gas futures fell on Tuesday to a 10-year low for a second straight day, as forecasts for moderate weather and growing concerns about record-high inventories and production kept weighing on prices, APA reports citing Bloomberg.

Even though cool Northeast and Midwest weather early this week should boost demand, traders said the mild outlook for later this week and next week was pressuring prices. Traders also said Tuesday’s bearish government data on production and consumption encouraged more selling, particularly with no extreme heat or cold on the horizon to boost demand.

The front-month gas futures contract on the New York Mercantile Exchange finished down 7.6 cents, or 3.6 percent, at $2.031 per million British thermal units. In late trade it slipped as low as $2.029, the lowest for the nearby contract since January 2002.

"EIA raised production more than demand which is going to make people hesitate about getting long (buying) futures. Cash (physical prices) are still drifting lower which means there’s just too much gas around," said Steve Mosley at SMC Advisory Services in Arkansas. The nearby contract, which tumbled 19 percent in March in its biggest monthly drop since August 2010, is down 4.5 percent so far in April.

The result is that spreads to winter contracts have widened sharply, with the December premium to May gaining 5 percent this month to $1.108, its widest in more than two years.