Natural Gas Futures Prices Off Due to Warmer Weather: What's the Forecast For the Rest of the Year?

U.S. natural gas prices are on a downward trend, as futures traders mull over key indicators like warmer-than-expected weather in November across much of the U.S. and higher stored inventories, which have both crimped price growth.

Natural gas prices had already fallen by 11% last week, and are struggling early this week, as well. Tuesday's trading continued the trend, with New York Mercantile Exchange prices falling by nearly 5%, to $2,684 per million British thermal units.

Natural gas futures have slid, as well. According to the U.S. Energy Information Administration, the New York Mercantile Exchange November 2016 contract expired on November 3 at $2.764/MMBtu. Meanwhile, the December 2016 contract decreased to $2.792/MMBtu, down 24 cents on a week-to-week basis.

Warmer weather patterns have settled in for a prolonged stay for a good portion of the country, especially across the Eastern U.S. and throughout the Great Lakes region. That reduces demand, and that trend has contributed to natural gas futures prices declining by over 10% through the first week of November.

Another factor negatively impacting natural gas prices - glut-level supplies, even though previous demand had been strong.

"Total natural gas demand in the Lower 48 states reached record levels during the 2016 injection season -- April through October," states the EIA this week. "According to data from PointLogic, natural gas consumption and net exports averaged 71.4 billion cubic feet per day - 2.2 Bcf/d above the 2015 injection season, which held the previous record."

Industry observers say that supply and weather are a significant one-two punch that is keeping prices down.

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