Forexpros – Natural gas futures fluctuated between small gains and losses on Tuesday, trading close to the lowest level in more than two-years as concerns over warm winter temperatures and growing U.S. inventory levels continued to dampen sentiment on the heating fuel.
On the New York Mercantile Exchange, natural gas futures for January delivery traded at USD3.248 per million British thermal units during U.S. morning trade, shedding 0.14%.
It earlier fell by as much as 0.45% to trade at a daily low of USD3.236 per million British thermal units. Prices fell to USD3.217 on Monday, the lowest since September 11, 2009.
The January natural gas contract lost nearly 6% in the last two trading sessions, its biggest two-day loss in seven months, as forecasts for warmer-than-normal winter weather was likely to limit heating demand.
Industry weather group MDA Federal said earlier that temperatures across the U.S. Upper Great Plains region and the Midwest were expected to be above-average through mid-December.
The weather group forecast temperatures to be at least five degrees warmer-than-normal along the East Coast and about three degrees higher in interior regions, according to its 6-to-10-day outlook.
Natural gas prices have closely tracked weather forecasts in recent weeks. Above-normal winter temperatures reduce the need for gas-fired electricity to heat homes, dampening demand for natural gas.
Concerns over record-high supply levels in the U.S. also added to the selling pressure. Currently, total U.S. natural gas supplies stand at 3.831 trillion cubic feet.
Stockpiles are 8.7% above the five-year average and 2.7% higher than last year at this time, underlining the view that U.S. gas supplies are sufficient to meet the needs of even an unusually harsh winter.
Early injection estimates for Thursday’s U.S. Energy Information Administration’s weekly supply report range from a decline of 60 billion cubic feet to 92 billion cubic feet. The five-year average stockpile change for the week is a drop of 142 billion cubic feet, according to U.S. Energy Department data.
Gas futures typically climb during the winter months, as temperatures fall and demand for heating fueled by natural gas rises. But mild weather coupled with high production levels have kept prices depressed in recent weeks.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in January rallied 1.95% to trade at USD99.67 a barrel, while heating oil for January delivery jumped 1.5% to trade at USD2.939 per gallon.
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