Forexpros – Natural gas futures tumbled for a fourth day on Wednesday, with the front month contract trading at a fresh low as sentiment on the heating fuel remained bearish amid forecasts for mild March weather that was expected to limit demand and concerns over record high U.S. inventory levels.
On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD2.307 per million British thermal units during U.S. morning trade, tumbling 2.1%.
It earlier plunged by as much as 3% to trade at USD2.283 per million British thermal units, the lowest for the lead contract since the 10-year low of USD2.231 hit in late January.
Natural gas prices came under pressure as weather forecasts continued to point to mild March weather, which was expected to limit demand for the heating fuel.
The Commodity Weather Group said earlier in the week that average temperatures from Montana to Massachusetts were expected to be 8 degrees higher than normal from March 10 to March 14.
The weather forecaster added that it sees no change to a “super-warm” outlook for the next 11-to-15-days, with the entire continental U.S. except for the west coast expecting much higher-than-normal temperatures.
Winter so far in the U.S. has been the second mildest since 1950. It is running about 13% warmer than the 30-year normal, according to recent data from MDA EarthSat.
With only 14 days left to go in the U.S. winter, the surplus of natural gas in inventory is continuing to grow, keeping gas prices on the defensive until summer cooling loads kick in.
Last winter at this time, cold weather conditions led to a decline of more than 2 trillion cubic feet from U.S. storage to help meet the surge in heating demand.
In contrast, only 1.4 trillion cubic feet of storage gas has been burned this winter season, a 36% drop.
Natural gas prices are down almost 18.5% in the past ten trading sessions.
Market analysts expect prices to drop even further and test USD2.00 per million British thermal units amid expectations U.S. gas inventories will end the winter at a record high 2.2 trillion cubic feet.
Early withdrawal estimates for Thursday’s storage data range from a decline of 66 billion cubic feet to 95 billion cubic feet, compared to last year’s drop of 63 billion cubic feet and the five-year average decline for the week of 92 billion.
Market participants noted that April is considered a transition month for natural gas.
Futures contracts tend to trade more lightly during spring months because demand for heating is weak and natural gas-fueled power plants have yet to step up production to serve air conditioners.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April edged up 0.25% to trade at USD104.97 a barrel, while heating oil for April delivery added 0.1% to trade at USD3.189 per gallon.
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