Natural Gas Futures Decline as Unusual Mild Temperatures to Cause Steep Drop in Heating Demand

NEW YORK, NY -- (Marketwire) -- 01/10/13 -- After reaching a 12-month high in November, natural gas futures have since fallen 19 percent. Futures have declined for three consecutive days on growing speculation that mild temperatures across the U.S. will cause a steep drop in heating demand. Five Star Equities examines the outlook for companies in the Natural Gas Industry and provides equity research on WPX Energy Inc. (NYSE: WPX) and Quicksilver Resources Inc. (NYSE: KWK).
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Unusually mild weather combined with near record inventories has created a bearish outlook for natural gas prices heading into peak demand season as roughly 50 percent of all households in the U.S. use natural gas for heating, according to the Energy Department. Historically, from late November to the first week of February natural gas prices have fallen approximately 42 percent.
"We see prices ultimately testing $2.20 and even last year's sub-$2, if the weather continues to moderate," wrote Energy OverView editor, Mike Fitzpatrick. "Like last year, we will be in a situation where we will be coming out of the peak-demand season with ample storage. The bearish sentiment will become overwhelming."
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WPX Energy is the nation's 10th largest natural gas producer, producing more than 1 billion cubic feet per day. With $1.7 billion in liquidity and nearly 1.6 million net acres under lease, the company holds a significant inventory of drilling opportunities. WPX Energy reported total natural gas production of 1,078 MMcf/d in third-quarter 2012, a 5 percent decrease when compared to the third quarter of 2011.
Quicksilver Resources is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas, primarily from unconventional reservoirs including gas from shales and coal beds in North America. The company has reported it is in negations to sell a non-operated minority working interest in its Barnett Shale Asset in North Texas.
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