Natural Gas depressed by Fed’s Twist
Natural gas fell to $3.70 per million British thermal units on Thursday, as seasonal factors and risk aversion, brought on by the Fed’s decision to refrain from QE3 on Wednesday, depressed the commodity.
With summer over, falling temperatures across the US prompts consumers to turn off air conditioners. At the same time, however, September is usually not cold enough to entice consumers to turn the heat on. As a result of mild weather conditions, electricity consumption between September and October tends to weaken, and natural gas prices often reach a seasonal low before recovering in the winter, when the use of heating fuel peaks. The Commodity Weather Group said that it expects seasonably-normal temperatures across most parts of the US midwest, east coast and south through late September, while Weather Derivatives said that US cooling demand may be 6% below average levels from 27 September through 1 October.
In the meantime, a report from Citigroup was bearish on the near-term outlook of the commodity, saying, ‘natural gas prices are likely to remain under pressure in the coming weeks, barring an unusual bout of cold-weather–triggering gas-fuelled heating demand, or a storm in the Gulf of Mexico production area.’
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