From the Wall Street Journal
Gas continues slide that wiped out more than a month of gains in last several days
Natural gas continued the downward slide that wiped out more than a month of gains amid forecasts of unseasonably warm weather in the coming weeks.
Prices have been falling for six consecutive sessions–natural gas’s longest losing streak since August.
Natural gas futures for November delivery fell 4.3 cents, or 1.55%, to $2.731 a million British thermal units on the New York Mercantile Exchange–its lowest settlement price since early September.
The November contract expires Thursday. The more actively traded December contract settled down 11.3 cents at $3.036/mmBtu.
The selloff is a reversal from recent weeks when traders, betting that supplies could become tight during a cold winter, sent natural gas prices to a 22-month high.
But forecasts for mild temperatures in the coming weeks prompted concerns among market participants who have been banking on a cold winter and triggered the selloff analysts said.
“The market is free falling,” Kent Bayazitoglu, director of market analytics at Gelber & Associates, wrote in a client note. “Speculators would be exiting long positions or entering into new shorts sensing blood in the water. Producers may be shorting the market further concerned that they can’t make future cash flows needed to service debt requirements.”
Many analysts had been perplexed by the fuel’s rally, and warned that it is risky to make bullish gas bets this early before the winter. Weather at this time of year is often so temperate that there is little demand for gas to heat or cool homes.
“To be honest, it just highlights the fact that the rally we saw in October wasn’t fundamentally driven,” Zane Curry, director of markets and research at Mobius Risk Group, said of natural gas’s fall in recent days.
