Forexpros – Natural gas futures were down sharply on Monday, tumbling to a 13-month low as warmer-than-normal winter weather in the U.S. underlined the view that gas supplies are more than ample to meet U.S. winter-heating needs.
On the New York Mercantile Exchange, natural gas futures for January delivery traded at USD3.247 per million British thermal units during U.S. morning trade, tumbling 2.13%.
It earlier fell by as much as 2.55% to trade at USD3.217 per million British thermal units, the lowest price since October 22, 2010.
The Commodity Weather Group said Friday that it expected above-average temperatures along most parts of the U.S. East Coast 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.
Weather service provider AccuWeather offered a similar outlook, saying it expected temperatures in the U.S. Northeast and Midwest, key gas-consuming regions, to mostly range from normal to slightly above normal from December 13 to December 17.
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 102 billion cubic feet 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.
U.S. inventories typically increase during the so-called “shoulder season”, the period in autumn after air-conditioning demand falls but before heating begins.
But this year’s increase, aided by unusually warm temperatures, offers a much larger cushion than in most years as winter approaches.
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 dropped 1.45% to trade at USD97.97 a barrel, while heating oil for January delivery shed 0.2% to trade at USD2.906 per gallon.
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