The prospect of a mild January has throttled the US natural gas market, pushing benchmark prices down in the biggest daily decline in almost two years. The 10.7 per cent fall in Nymex February gas futures, to $3.327 per million British thermal units on Tuesday, reversed a furious rally in gas futures that began in November. The uses of natural gas include power generation, manufacturing and fertiliser, but demand typically peaks during the winter heating season.
Investors had flocked to gas futures amid sub-zero temperatures in cities such as Chicago and Minneapolis last month. As of late December, hedge funds held record net bullish positions on gas contracts listed at the New York Mercantile Exchange and Intercontinental Exchange. While more chilly weather is expected this week, gas prices dropped “as the temperature outlook has turned noticeably warmer than a few days ago”, said Tim Evans, energy analyst at Citigroup. Government forecasters say above-normal temperatures could extend across much of the country into the second half of January, typically the coldest month of the year.