Natural gas prices sank to fresh, 10-year lows Thursday as warm weather reduced demand in the huge U.S. market.
The February contract closed down 15 cents, or 6.1 per cent, at $2.32 US per thousand cubic feet, its lowest level since March 2002.
The drop came as the U.S. Energy Department reported that gas in storage shrank by 87 billion cubic feet to 3.290 trillion cubic feet for the week ended January 13, an unusually low withdrawal for the winter season.
Analysts expected a drop of 88 billion to 92 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The inventory level was 20.8 per cent above the five-year average of 2.724 trillion cubic feet, and 19.6 per cent higher than last year's level of 2.751 trillion cubic feet, according to the government data.
Demand falls with warm weather
Unusually high temperatures in the huge U.S. market have meant less demand for the heating fuel.
The outlook is for that trend to continue.
The U.S. National Oceanic and Atmospheric Administration Thursday predicted temperatures in February will be above normal for most of the central and eastern U.S. as well as the southern Mid-Atlantic States through the Deep South.
Calgary-based investment bank Peters and Co predicted in a report Thursday that gas in storage by the winter’s season’s end, which in the industry is March 31, will reach 2.1 trillion cubic feet, 23 per cent above the previous high in March 2006 and 40 per cent above the historic average of 1.5 trillion cubic feet.
Statistics Canada figures show natural gas accounted for four per cent of the country’s exports in 2010, worth about $15.6 billion.