Natural-gas futures extended their earlier losses on Friday after
government data showed a smaller-than-expected decline in U.S.
inventories.
Natural gas for February delivery fell 8.1 cents, or 1.9%, to
$4.24 a million British thermal units on the New York Mercantile
Exchange. Futures had traded at about $4.26 a million British thermal
units before the report.
Natural-gas inventories fell by 97 billion cubic feet during
the week ended Dec. 27, the Energy Information Administration said.
Analysts and traders in a Wall Street Journal survey had forecast a draw
of 134 bcf.
Traders viewed the smaller reduction in stockpiles as a sign
that demand was falling short of expectations, said Bill Baruch, a
senior market strategist with Chicago-based brokerage iiTrader.
Natural-gas use typically rises in winter as cold weather sparks greater
demand to heat homes and businesses.
"People saw it get colder a couple weeks ago," Mr. Baruch
said, spurring a rise in gas futures to the highest price in more than
two years last month. After the smaller-than-expected withdrawal,
investors are betting that the rise in prices more than accounted for
the pace of demand, Mr. Baruch said.
Inventories stood at 2.974 trillion cubic feet, 16% below the
exceptionally high year-ago level and 9% below the five-year average for
the week.
Natural gas prices had surged 2.2% on Thursday as traders
anticipated a storm that dumped as much as two feet of snow in some
areas of the Northeast by early Friday. The blizzard conditions,
analysts say, could increase demand for natural gas.
But natural-gas traders Friday focused on revised weather
forecasts showing the cold will lift across key gas-consuming areas in
the Midwest and Northeast by late next week. Meteorologists with private
forecaster MDA Weather Services on Friday projected "a much warmer map"
for the country then, compared with previous estimates.