Forexpros – Natural gas prices declined on Wednesday, trading close to the lowest level in more than two years as forecasts for warmer-than-normal winter weather in the U.S. continued to underline 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 USD3.102 per million British thermal units during U.S. morning trade, dropping 0.85%.
It earlier fell by as much as 1.35% to trade at a daily low of USD3.095 per million British thermal units.
Prices fell to USD3.050 on Monday, the lowest since September 11, 2009, when futures last traded below the psychologically-important USD3.00 level.
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.
The January natural gas contract has lost nearly 15% since the beginning of December, as record high storage levels in the U.S. and forecasts of warm December weather drove down prices to a series of 27-month lows.
Most weather forecasts continued to point to warmer-than-normal temperatures across most parts of the northern half of the U.S. and the eastern seaboard through early January, dampening hopes for a pick up in heating demand.
Weather service provider WSI Energycast said Tuesday that it expected temperatures of as much as 10 to 15 degrees warmer-than-usual for this time of year in many east coast cities through the first week of January.
Natural gas prices have closely tracked weather forecasts in recent weeks. Warmer-than-normal winter temperatures reduce the need for gas-fired electricity to heat homes, dampening demand for natural gas.
Meanwhile, markets were looking forward to the U.S. Energy Information Administration’s weekly report on U.S. natural gas stockpiles for the week ended December 16 on Thursday.
Early injection estimates range from a decline of 93 billion cubic feet to 110 billion cubic feet. Stocks fell by 181 billion cubic feet the same week a year earlier, while the five-year average change for the week is a drop of 140 billion cubic feet, according to U.S. Energy Department data.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February jumped 0.95% to trade at USD98.16 a barrel, while heating oil for January delivery rallied 1.4% to trade at USD2.889 per gallon.
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