07 November 2007 20:44 [Source: ICIS news]
HOUSTON (ICIS news)--US natural gas futures shrugged off cold temperatures in the northeastern and midwestern US, as prices fell 23.9 cents (-3.04%) to close on Wednesday at $7.624/m Btu on longer-term forecasts of warming.
Sources said forecasters anticipated higher temperatures over the principle heating-fuel areas. With stocks at record levels and softening demand expected, traders liquidated positions.
Inventories at the start of the 2007-2008 winter heating season were at record levels of 3,509 bcf, according to the latest report released on 1 November by the Energy Information Administration (EIA).
The NYMEX natural gas futures contract showed a general decline in prices throughout the session.
In addition to high inventories, the EIA said US natural gas proved reserves increased by 3% in 2006 to more than 211,000 bcf. The report, issued on Monday, stated that reserves were at their highest level since 1976.
The natural gas exploration activities replaced 136% of the dry natural gas produced in 2006. The increase marked the eighth consecutive year that proved reserves have increased.
In the latest Short Term Energy Outlook, issued on Tuesday, the EIA said Henry Hub spot natural gas prices averaged $6.94/mcf in October and projected a winter peak monthly average of $8.65/mcf in January 2008.Consumption was expected to rise by 4.5% in 2007, primarily because of increased demand from residential, commercial and electric-power sectors during the early part of the year.
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