Natural gas futures ended slightly lower Friday,
pressured by profit-taking as prices remained within a tight range.
Natural gas for June delivery on the New York Mercantile Exchange settled 2.7
cents lower, or 0.62%, at $4.312 a million British thermal units after reaching
a low of $4.252/MMBtu earlier in the day.
Gas traders were offloading contracts to capitalize on higher prices after a
government report Thursday showed a more modest build in gas inventories than
traders and analysts had expected. But gas prices have stayed within a narrow
trading range since mid-March as mild spring weather and ample supplies fail to
propel the market very far in either direction.
"The natural gas market is seeing some selling...with the emotional reaction
to Thursday's smaller than expected 94 bcf net injection to U.S. natural gas
storage having run its course, and the market apparently having failed to reach
escape velocity to exit its recent equilibrium trading range on the upside,"
wrote Tim Evans, an energy analyst with Citi Futures Perspective in New York,
in a note to clients Friday.
The fact that gas prices remained about $4.25/MMBtu on Friday, a key support
level, means the market could move higher next week, said Jay Levine, the
president of Enerjay LLC, a Portland, Maine energy brokerage.
"It bodes well that we eked out only a small loss on the day today," Levine
said. "The fact that we're still confined within recent ranges but retested and
held $4.25 indicates there's something still left in the tank here."
Although gas production from onshore shale-rock formations remains robust,
producers may be starting to pull back in response to low prices. Gas futures
are about 24% below where they were trading at the beginning of the year.
Oil field services company Baker Hughes Inc. (BHI) reported Friday that the
number of rigs drilling for gas in the U.S. this week fell to 951, a decrease
of two rigs.
But gas supplies remain abundant. Total gas in U.S. storage as of May 7 was
2.089 trillion cubic feet, about 18.4% above the five-year average and 4.9%
above last year's level for the same week.
Moderate spring temperatures, meanwhile, continue to place downward pressure
on gas prices. The mild weather has sparked little demand for natural gas for
heating and cooling. WSI Corp., an Andover, Mass. private forecaster, was
predicting above-normal temperatures across the Midwest, Northeast, and parts
of the Southeast and West from May 17 through May 24. |
