Natural gas futures fell Tuesday as the market enters the so-called shoulder-period of autumn. That’s the period of typically sluggish demand—when mild weather reduces demand, before recovering in the winter when heating-fuel peaks. Typically, natural gas futures often reach a seasonal low in October.
Natural gas prices added to losses on Friday, falling 1.35% after industry weather group MDA Federal said that it expected mild autumn weather to spread across the northeastern U.S. states over the next two weeks. Although above-normal temperatures are expected through much of the West over the next six to 10 days, much cooler weather should prevail in the South during the same period.
“You have a market that doesn’t have much in the way of bullish elements over the next several months,” said Cameron Horwitz, analyst at Canaccord Genuity in Houston.
Natural gas for October delivery recently traded down 2.5 cents, or 0.7%, to $3.804 a million British thermal units on the New York Mercantile Exchange.
Concerns over rising production levels also weighed on prices. Industry research group Baker Hughes said Friday that the number of active rigs drilling for natural gas in the U.S. last week jumped by 20 to 912, the highest since January 28, when the total stood at 913.
Natural gas traders closely watch the rig count to gauge future supply growth. The rig count is down from a 2010 peak of 992, but the current level of activity is still widely expected to lead to further production gains.
A drop to the 800-rig-level would be necessary to begin to balance the market, according to Baker Hughes.
Prices could march lower later this week if the Energy Information Administration reports a bigger-than-expected build in gas storage in its weekly inventory survey due Thursday.
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