Natural gas sinks past 2012 low as Christmas likely warmer

According to latest forecast, Christmas in the United States will be much warmer than usual. It won't be until January temperature falls toward zero mark, while high temperatures around LA, Texas, Florida could remain as high as 70 degree Fahrenheit.

So this year winter might be weak and short. High temperatures are expected to start rising as early as February and by March, temperature will start warming up across states.

That makes the outlook bleak for natural gas this winter.

Natural gas, today, sank to 2012 lows below $2/mmbtu and price action suggests further drop is likely. Currently trading around $1.9/mmbtu.

Moreover, last Thursday, natural gas inventory report shows drop by 76 billion cunic feet, higher than expected 64 billion cubic feet but much lower than 100 billion, which could have dented bears' conviction. Inventory this year reached record 4000 billion cubic feet, more than sufficient to cover extra demand, if winter remains sloth.

By summer next year, if inventory built up pace remains high like 2015, price could reach as low as $1.5/mmbtu.