Forexpros – Natural gas prices plunged on Wednesday, trading at the lowest level since September 2009 as forecasts continued to point to warmer-than-normal winter weather in the U.S., dampening demand expectations for the heating fuel.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.803 per million British thermal units during U.S. morning trade, plunging 4.7%.
It earlier fell by as much as 4.9% to trade at USD2.796 per million British thermal units, the lowest since September 10, 2009.
Prices continued to trade below the psychologically-key USD3.00-threshold as sentiment on the heating fuel remained downbeat after the Commodity Weather Group said earlier that temperatures in the U.S. East Coast will probably remain mild through February.
According to the weather group, the period from November 1 to January 8 was the third-warmest in the U.S. over the last 100 years, based on natural gas-weighted heating degree days.
On Tuesday, industry group Weather Derivatives said that U.S. heating demand from January 11 through January 17 will remain below seasonally-normal levels for this time of year.
Average heating degree days in the U.S. have failed to reach normal levels for 11 straight weeks, the group said.
Natural gas futures have closely tracked weather forecasts in recent weeks. Above-average winter temperatures decrease the need for gas-fired electricity to heat homes, reducing demand for natural gas.
Also adding to selling pressure, Wall Street lender Bank of America-Merrill Lynch made sharp cuts to its 2012 average natural gas price forecast.
In a report published Tuesday, the bank expected prices to average USD3.30 per million British thermal units, down from a previous estimate of USD4.30.
The report added that prices were expected to fall below USD2.00 by October of 2012, “in order to curtail rampant production growth and create enough demand to avoid storage containment issues.”
Meanwhile, natural gas traders were looking forward to the U.S. Energy Information Administration’s weekly report on U.S. natural gas stockpiles for the week ended January 6 on Thursday.
The report was expected to show that U.S. natural gas inventories declined by 87 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February dropped 1% to trade at USD101.22 a barrel, while heating oil for February delivery eased 0.05% to trade at USD3.100 per gallon.
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