Forexpros – Natural gas prices were down sharply on Monday, falling to a fresh 28-month low for the fifth consecutive day as forecasts for warmer-than-normal winter weather in the U.S. and concerns over high inventory levels continued to dampen sentiment on the heating fuel.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.561 per million British thermal units during European early afternoon trade, plunging 4.08%.
It earlier fell by as much as 4.5% to trade at USD2.546 per million British thermal units, the lowest since September 4, 2009.
Front-month gas futures prices on the NYMEX have fallen in 15 of the past 18 trading sessions.
Natural gas prices added to last week’s 12.8% plunge, which was the biggest weekly drop since August 2009 as long-range weather forecasts continued to point to above-average temperatures across the U.S. through early February.
Futures have tumbled nearly 29% since the beginning of December. So far in January, prices are approximately 42% lower than a year ago. The natural gas contract has not been this cheap at this time of year since 2002.
Gas futures typically climb during the winter months, as temperatures fall and demand for heating fueled by natural gas rises.
But mild winter weather in key gas-heating areas in the U.S. have kept prices depressed at 28-month lows in recent sessions.
Winter temperatures in the U.S. have yet to reach levels cold enough to boost demand for the heating fuel. In the Northeast, there have been only four warmer Decembers in the last 117 years, according to the U.S. National Weather Service.
Concerns over elevated inventory levels in the U.S. also added to selling pressure. Currently, total U.S. natural gas supplies stand at 3.377 trillion cubic feet, up 13.4% compared to the same week a year earlier and 17% above the five-year average for the week.
Prices are expected to come under further pressure in the near-term after the U.S. Energy Information Administration said last week in its short-term energy outlook that it expects gas inventory to end October 2012 at a record 3.96 trillion cubic feet, while storage capacity is estimated at around 4.4 trillion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March rose 0.83% to trade at USD99.70 a barrel, while heating oil for February delivery gained 0.9% to trade at USD3.054 per gallon.
NYMEX floor trading will be closed on Monday for the Martin Luther King Jr. holiday.
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