March natural gas prices broke out to a new 12-session high overnight but has since come off its best levels. Perhaps some of that weakness comes in the wake of forecasts from the National Weather Service that estimated this week's US heat-related demand for natural gas to be about 29% below normal levels. The agency estimated last week's demand about 25% below normal levels. Some traders also viewed record natural gas storage in the US and aggressive production schedules as a limiting force to price gains in March natural gas. This comes as last week's EIA data showed current inventories were at 21% above the five-year average. While a number of US companies announced plans to cut natural gas production last week, many in the market feel that they are not large enough to cut into short-term supplies. However, Dominion Resources expects greater demand for electricity generation in 2012, driven by more fuel switching by utilities moving away from higher priced coal and oil. The Commitments of Traders Futures and Options report as of January 24th showed non-commercial traders were net short 142,997 contracts, a decrease of 15,493. Non-commercial and non-reportable traders combined held a net short position of 116,486 contracts. This represents a decrease of 10,419 contracts in the net short position held by these traders.
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