Forexpros – Natural gas futures plunged to the lowest level in more than a year on Friday, as record high storage levels in the U.S. and forecasts of mild late November weather drove prices lower.
On the New York Mercantile Exchange, natural gas futures for delivery in December settled at USD3.316 per million British thermal units by close of trade on Friday, tumbling 6.3% over the week, its steepest one-week decline in five months.
Earlier in the day, prices fell to USD3.288 per million British thermal units, the lowest price since October 22, 2010.
Natural gas futures have declined in seven of the past eight trading sessions and have plunged nearly 15% since the beginning of November.
Concerns over ample U.S. supplies weighed heavily after the U.S. Energy Information Administration said in its weekly supply report on Thursday that natural gas storage in the U.S. rose by 19 billion cubic feet last week.
Supplies declined by 1 billion cubic feet in the same week a year earlier, while the five-year average change is a buildup of 10 billion cubic feet.
The weekly injection saw total U.S. natural gas storage rise to an all-time high of 3.850 trillion cubic feet, exceeding the previous high of 3.831 from November of last year. It also widened the surplus to the five-year average by 9 billion cubic feet to 224 billion, or 6.2%.
Early injection estimates for next week’s storage data range from 9 billion cubic feet to 28 billion cubic feet. The five-year average stockpile change for the week is a decline of 7 billion cubic feet, according to U.S. Energy Department data.
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 gain, aided by unusually warm temperatures, offers a much larger cushion than in most years as winter approaches.
Meanwhile, worries that winter weather in the U.S. would not be cold enough to significantly reduce U.S. supplies also added to selling pressure.
The Commodity Weather Group said Friday that it expected temperatures in the upper Great Plains and western Great Lakes region to be warmer-than-normal through November 25.
Also Friday, industry weather group MDA Federal said that temperatures in the Northeast-region, including New York, may be 3 to 4 degrees warmer through November 27, according to the company’s six-to-ten-day weather outlook.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts for late October and early November on heating demand.
Elsewhere on the Nymex, light sweet crude oil futures for January delivery traded at USD97.64 a barrel by close of trade on Friday, dropping 1.48% on the week, while heating oil for December delivery tumbled 4.75% over the week to trade at USD3.039 per gallon by close of trade Friday.
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