Forexpros – Downward pressure remains heavy on natural gas as prices plunged to new 28-month lows for the sixth straight day on Tuesday, as forecasts as warm winter weather forecasts in the U.S. and bearish worries over high inventory levels continued to weigh on the heating fuel.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.487 per million British thermal units during late U.S. trade, plummeting 6.85%.
Prices plunged earlier by as much as 7.35% to trade at USD2.474 per million BTU, the lowest since September 4, 2009, when prices dropped to a ten-year low of USD2.408.
Front-month gas futures prices on the NYMEX have weakened in 16 of the past 19 trading days. Prices have tumbled approximately 18% since January 10, marking the worst six day performance since November 2006.
Sentiment on the heating fuel remained bearish after the U.S. National Weather Service forecast that temperatures were expected to remain above-normal in the next six to ten days across the U.S. northeast and north-central regions, the nation’s largest winter natural gas consumption heating markets.
Meanwhile, the Commodity Weather Group said earlier that large portions of the U.S. may experience “major warming” though the end of January, with the potential for record high temperatures.
The weather group added that this winter has been the third-warmest since 2000 to date.
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. added to selling pressure. Currently, total U.S. natural gas supplies remain at 3.377 trillion cubic feet, up 13.4% compared to the same week a year over year and 17% higher than the five-year average for the week.
Natural gas futures have collapsed nearly 31% since the beginning of December. To this date in January, prices are approximately 45% lower than a year ago. The natural gas contract has not been this inexpensive during this time for the last decade.
Citibank made clear in a report last week, “In the near term, there appears to be no bottom for the front contract price as it continues to fall on weak seasonal heating demand.”
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in March climbed 1.88% to trade at USD100.74 a barrel.
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