The 6.7 percent decline this week is the fourth such straight drop for front-month prices, the longest streak in almost a year. A mild winter in many parts of the U.S. is reducing the need to draw supplies from storage. Inventories declined by 89 billion cubic feet last week, the Energy Information Administration said Thursday, less than the average 158 billion draw seen from 2012 to 2016.
“The wash-out now is driven mainly by a mild weather outlook, an apparent increase in projected winter gas storage levels, and very high net-length positioning in the managed money category,” Citigroup Inc. analysts including Ed Morse wrote in a report Wednesday.
Natural gas this year is the worst performer and most volatile member of the Bloomberg Commodities Index. Front-month futures are down 29 percent since the start of 2017, and there have been 11 sessions so far this year in which prices settled more than 3 percent higher or lower than the previous session.
That’s been bad news for speculators, who in January raised their net-long positions in four natural gas contracts to the highest since 2014.
Futures for March delivery, which expire Friday, rose as much as 1.2 percent to $2.649 per million British thermal units on the New York Mercantile Exchange and traded at $2.645 as of11:33 a.m. London time. The more actively traded April contract added 1 percent to $2.777. Trading volume for all contracts was about 37 percent below the 100-day average for the time of day.