Natural gas futures fall. A mild winter to blame?

Natural gas futures slipped 3.8 percent Wednesday, ending a six-day rally. Analysts attribute the drop in natural gas futures to weather forecasts predicting relatively warm temperatures for the coming winter. 

Mark Stahl/AP
In this 2011 file photo, a large drilling rig sits outside the Covelli Center in Youngstown, Ohio. Natural gas futures fell Wednesday amid predictions of a mild winter.

Natural gas futures slipped 3.8 percent Wednesday amid forecasts of milder weather.

The drop comes after a six-day rally in which futures rose more than 24 percent.

Front-month November natural gas futures peaked at $3.546 per mmBtu Tuesday, the highest since December 2, 2011. The gains were driven largely by earlier forecasts of cooler weather.

But new forecasts projected milder weather ahead and cast doubt among traders Wednesday.

Temperatures will likely be above the 10- and 30-year normal ranges this winter, according to MDA EarthSat Weather. 

A warm winter means reduced heating consumption and less demand from power plants. Should the forecasts prove accurate, it would be the second consecutive winter, typically measured as December through February, to produce low energy demand.

“Traders are looking at the forecasts,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, told Bloomberg Businessweek. “We’ve run out of momentum after trying to stay above $3.50. A pullback is justified here.”

By early Wednesday morning, the streak had broken. Futures dropped 11.1 cents, or more than 3 percent, to $3.42 per mmBtu. 

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.