Thursday, January 08, 2015
Natural gas prices closed at a new two-year low on Wednesday, shrugging off a cold front covering most of the nation to erase early-morning gains and spend the afternoon in decline.
Natural gas for February delivery settled down 6.7 cents, or 2.3%, at $2.871 a million British thermal units on the New York Mercantile Exchange. Prices briefly peaked above $3/mmBtu, but fell back into the pattern of volatility that has led to wild swings since November.
Prices are now down more than 36% since Nov. 20, a time when demand for home heating often sends prices to their yearly peaks. But record production and tepid heating demand during a mild December have allowed stockpiles to become so healthy that even an Arctic cold front can't spur traders to bid up prices, analysts said.
"If it wasn't for this cold, we basically would have been able to drive (lower)," said Gene McGillian, an analyst at Tradition Energy. "It just reflects the massive amounts of gas we're producing right now."
Production set a new record by averaging at 72.8 billion cubic feet a day in December, according to Platts oil and gas analytics unit Bentek Energy. That is up 11.6% compared to daily average production levels in December 2013, it said.
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