INV: Natural gas futures hit 5-week low on mild weather outlook
Investing.com - Natural gas futures fell to a five-week low during U.S. morning trade on Monday, as a milder weather outlook for several days next week weighed on near-term demand expectations for the heating fuel.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on winter heating demand.
On the New York Mercantile Exchange, natural gas futures for delivery in March traded at USD3.227 per million British thermal units during U.S. morning trade, down 1.4% on the day.
It earlier fell by as much as 1.9% to trade at a session low of USD3.208 per million British thermal units, the weakest level since January 11.
Updated weather forecast models called for temperatures in the key Northeast and Midwest markets to warm to normal levels in the next six-to-10-days.
Bearish speculators are betting on the mild weather reducing winter demand for the heating fuel after forecasts originally called for colder-than-average weather during the period.
The heating season from November through March is the peak demand period for U.S. gas consumption. Nearly 50% of all U.S. households use gas for heating.
The heating fuel has lost nearly 12% since rallying to two-month high of USD3.644 per million British thermal units on January 21, after updated weather forecast models pointed to mostly mild temperatures for mid-February.
Market participants have warned of additional downside to prices, as the coldest part of the winter has effectively passed and below-normal temperatures in February and March mean less than they do in January.
Concerns over bloated U.S. inventory levels also weighed. Total U.S. natural gas storage stood at 2.684 trillion cubic feet as of last week, 15% above the five-year average for this time of year.
Early withdrawal estimates for this Thursday’s storage data range from 128 billion cubic feet to 180 billion cubic feet.
Inventories fell by 113 billion cubic feet in the same week a year earlier, while the five-year average change for the week is a decline of 154 billion cubic feet.
If withdrawals for the rest of winter season match the five-year average pace, inventories will end the heating season at 2.079 trillion cubic feet, nearly 20% above normal, but 16% below last year's end-winter record of 2.48 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March shed 0.4% to trade at USD95.36 a barrel, while heating oil for March delivery dipped 0.5% to trade at USD3.222 per gallon.
