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NYMEX March gas futures settle at $2.713/MMBtu, down 8.4 cents

https://www.chemnet.com   Feb 13,2015 Platts
The NYMEX March natural gas futures contract settled at $2.713/MMBtu Thursday, down 8.4 cents, as the market responded bearishly to gas storage data that was on the low end of analyst expectations.

"The smaller-than-expected 160-Bcf draw was the third consecutive bearish miss, reinforcing the idea that the background supply/demand balance has weakened, most likely on increased supply," Citi Futures Perspective analyst Tim Evans said in an email. "This will be a test of market sentiment and will possibly downgrade the concern about upcoming cold."

US natural gas in storage fell 160 Bcf to 2.268 Tcf for the week that ended Friday, the US Energy Information Administration said Thursday in its weekly gas storage report. The pull from storage stocks was on the low end of analyst expectations that EIA would estimate a 160-170 Bcf draw.

"On its face, the draw was not that bearish, but smaller-than-average withdrawals in cold conditions are a harbinger of things to come," said Aaron Calder, senior market analyst at Gelber & Associates.

To absorb the oversupply that has resulted from rapid natural gas production growth from areas like the Marcellus Shale, "prices need to remain low to encourage fuel switching to natural gas," Calder said.

But freeze-offs in major producing regions like the Marcellus that could curtail supply growth "remain the short-term hope for bullish traders looking for a rally," he added.

"In the long-term, falling rigs and dwindling associated gas production will eventually curtail the glut, which is reflected in winter 2015-16 pricing," Calder said. "For the time being, there is a lot of natural gas available and the market is struggling to figure out what to do with it."

The NYMEX March gas futures contract traded Thursday between $2.679/MMBtu and $2.883/MMBtu.

The NYMEX settlement is considered preliminary and subject to change until a final settlement is posted at 7 pm EST (2400 GMT).

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