Forexpros –
Forexpros – Natural gas futures plunged Monday, extending the previous week’s sharp drop as sentiment on the heating fuel remained bearish amid forecasts for warmer than usual March weather and concerns over record high U.S. inventory levels.
On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD2.36 per million British thermal units during U.S. afternoon trade, tumbling 4.93%.
Prices hit a high of USD2.44 and a currently trading at the sessions low of USD2.36 per BTU.
.Natural gas prices gave back nearly 8% last week, the biggest weekly drop since early February and are down almost 16% in the past eight trading sessions.
Market participants noted that April is considered a transition month for natural gas.
Futures contracts tend to trade more lightly during spring months because demand for heating is weak and natural gas-fueled power plants have yet to step up production to serve air conditioners.
Natural gas prices came under intense selling pressure after the Commodity Weather Group said earlier that U.S. energy demand for heating is expected to be lower-than-normal this week due to warmer weather.
The weather group said that average temperatures from Montana to Massachusetts were expected to be 8 degrees higher than normal from March 10 to March 14.
Warmer weather was then set to move from the U.S. Ohio Valley to the Northeast, dampening demand for the heating fuel.
Meanwhile, concerns over elevated inventory levels continued to weigh on the commodity. Total U.S. natural gas storage stood at 2.513 trillion cubic feet as of last week, a record high for this time of year and 45% higher than the five-year average.
Market analysts expect natural gas prices to retest January’s ten-year low of USD2.319 per million British thermal units, amid expectations U.S. gas inventories will end the winter at a record high 2.2 trillion cubic feet.
Early withdrawal estimates for next week’s storage data range from a decline of 66 billion cubic feet to 95 billion cubic feet, compared to last year’s drop of 63 billion cubic feet and the five-year average decline for the week of 92 billion.
Last winter at this time, cold weather conditions led to a decline of more than 2 trillion cubic feet from U.S. storage to help meet the surge in heating demand.
In contrast, only 1.4 trillion cubic feet of storage gas has been burned this winter season, a 36% drop.
Winter in the U.S. has been the second mildest since 1950. It is running about 13% warmer than the 30-year normal, according to recent data from MDA EarthSat.
With only 16 days left to go in the U.S. winter, the surplus of natural gas in inventory is continuing to grow, keeping gas prices on the defensive until summer cooling loads kick in.
Gas prices fell to USD2.319 per million British thermal units on January 20, the lowest since February 2002, before rebounding after a production-cut announcement by Chesapeake Energy triggered a short-covering rally.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April climbed 0.28% to trade at USD106.17 a barrel, on Iranian supply disruption fears.
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