Dec. 13 (Bloomberg) -- Natural gas futures fell from a two- year high in New York as meteorologists predicted moderating temperatures that would curb demand for the heating fuel after frigid weather this week.
Gas dropped for the first time this week as WSI Corp. in Andover, Massachusetts, said temperatures may be average or higher than usual in the eastern and southern U.S. next week after below-normal readings through Dec. 17. Gas climbed to $4.409 per million British thermal units yesterday, the highest settlement since July 20, 2011.
“The forecasts are looking really mixed,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “The million-dollar question is, ‘What’s the weather going to do after this week?’ We’re seeing a little short-term profit-taking.”
Natural gas for January delivery fell 5.8 cents, or 1.3 percent, to settle at $4.351 per million Btu on the New York Mercantile Exchange. Trading volume was 32 percent above the 100-day average at 2:43 p.m. Prices are up 30 percent this year and climbed 5.8 percent this week, capping a sixth consecutive weekly gain. The futures reached $4.443 today, the highest intraday price since May 1.
The premium of January to February futures fell 0.7 cent to 0.1 cent. March gas traded 18.2 cents above the April contract, compared with 19.3 cents yesterday.
February $5.15 calls were the most active options in electronic trading. They were unchanged at 7.2 cents per million Btu on volume of 2,905 at 3:03 p.m. Calls accounted for 68 percent of trading volume.
The low in Boston on Dec. 22 may be 34 degrees Fahrenheit (1 Celsius), 8 above average, according to AccuWeather Inc. in State College, Pennsylvania. Temperatures in Washington may fall to 39 degrees, 8 higher than normal.
About 49 percent of U.S. households use gas for heating, according to the Energy Information Administration, the Energy Department’s statistical arm.
“The front month is dangerously overbought and dependent on continued arctic weather forecasts to keep it at its lofty heights,” Aaron Calder, an analyst at Gelber & Associates in Houston, said in a note to clients today. “If temperature forecasts revert to seasonal norms over the weekend, the front month would be due for a steep decline.”
Gas stockpiles totaled 3.533 trillion cubic feet in the week ended Dec. 6, 3 percent below the five-year average and 7.2 percent less than supplies a year earlier, EIA data show.
Marketed gas production in the U.S. may rise 1.8 percent to 70.45 billion cubic feet a day this year and advance to 71.43 billion a day in 2014, the EIA said Dec. 10 in its monthly Short-Term Energy Outlook.
Supply from the Marcellus shale formation in the Northeast may climb 418 million cubic feet a day, or 3.1 percent, to 13.7 billion cubic feet a day in January from a month earlier, the agency said Dec. 9 in its drilling productivity report.
The number of rigs drilling for natural gas in the U.S. declined six to 369, according to data released today by Baker Hughes Inc. in Houston. The total is down 14 percent this year.
--Editors: Bill Banker, Richard Stubbe