Thursday saw natural gas futures in decline for the sencond consecutive session. The move comes in anticipation of an EIA report which is expected to show a 4.8% uptick in nattie storeage over the five-year average, but also a decline in consumer demand for home heat. January natural gas fell 6.8 cents to $3.733 -- a 1.8% decline.
A dip is typical for this time of year, but milder temeratures across the country have stifled demand. The five-year average would have draws this time of year amounting to around 18 billion cubic feet, but EIA's report shows only an 8 bcf reduction during the report week -- and mild temps are expected to continue.
"Looking at the temperature forecasts, they're forecasting some very mild temperatures in the short term," said an analyst at Gelber & Associates. "Further out it gets less mild...but there isn't any bracing cold to rally behind."
This week's declines in January natural gas futures come after recent highs in an autumn rally on extended power generation for air conditioner use. Much of the nation is experiencing weather that requires very little climate control at home and the slowdown on consumer use pulled the rug out from under nattie.
This is great news for nitrogen producers and end users in the field as robust supplies of natural gas will help keep prices in check and may make up for any added near-term transport costs the industry may incur in the face of a shrinking Mississippi river.