Warm forecast chills natural gas stocks

Shares of natural gas producers slipped Monday along with the price of natural gas after warmer weather was forecast for early December.

Natural gas is burned to heat homes in half of the nation's households, according to the U.S. Energy Department.

Forecasters expect this winter to be much colder than last year's record warm one. But forecasters are now predicting that early December will be warmer than originally forecast for most of the U.S.

Those predictions sent natural gas prices tumbling 3.5 percent to $3.89 per thousand cubic feet Monday on the New York Mercantile Exchange.

Investors in shares of natural gas producers worried that the producers won't fetch as much for their fuel as expected if demand falls, storage levels rise and prices slide even further.

Chesapeake Energy shares dropped 58 cents, or 3.3 percent, to $17.25 per share in midday trading Monday. Range Resources shares fell $2.18, or 3.1 percent to $67.55. Cabot Oil & Gas Corp. fell $1.69 or 3.4 percent to $48.19.

Last winter's warm weather created a glut of natural gas that sent prices to a decade-low of $1.91 per thousand cubic feet in April. The glut has been slowly easing as natural gas producers have cut back on drilling and a hot summer created demand for natural gas-fired electricity to run air conditioners.

Natural gas prices have been climbing. They are now 10 percent higher than where they were last year on forecasts that a more normal winter will return heating demand to more normal levels.

But storage levels are still historically high, so any prospect of warmer temperatures again this winter leads to sharp sell-offs of natural gas — and of shares of natural gas producers.

Commodity Weather Group said in its report to clients Monday that for the next 6 to 10 days "very strong warming" is expected, with highs in the Midwest and East in the 50s and 60s, while Texas could climb into the 80s. The firm expects more normal weather to return later in December.