Forexpros – Natural gas prices added to sharp losses on Monday, plunging to yet another 28-month low as forecasts continued to point to above-average winter weather in the U.S., reducing the need for gas-fired heating demand.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.542 per million British thermal units during U.S. morning trade, plummeting 4.78%.
It earlier plunged by as much as 4.95% to trade at USD2.538 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. Prices tumbled 12.8% last week, the biggest weekly drop since August 2009.
Sentiment on the heating fuel remained bearish as long-range weather forecasts continued to point to above-average temperatures across the U.S. through early February.
The Commodity Weather Group said earlier that the outlook for January heating degree days, a measure of demand for fuel during cold weather, fell by 115, or 12%, to 822 from a December 30 estimate of 937.
In a report earlier, the weather group said, “It’s nowhere close to what we were expecting. It’s making everyone question whether there will be any cold weather this winter.”
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.
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 0.74% to trade at USD99.61 a barrel, while heating oil for February delivery jumped 0.97% to trade at USD3.056 per gallon.
NYMEX floor trading will be closed on Monday for the Martin Luther King Jr. holiday.
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