Forexpros – Natural gas futures pulled back from a six-week high on Monday, as traders turned their attention from the weekend’s U.S. Northeast snowstorm to forecasts showing mild weather in the coming week which was expected to limit heating demand.
On the New York Mercantile Exchange, natural gas futures for December delivery traded at USD3.874 per million British thermal units during U.S. morning trade, dropping 1.25%.
Natural gas prices rose by as much as 0.65% earlier to trade at USD3.963 per million British thermal units, the highest price since September 15.
Prices rallied nearly 4.3% on Friday as markets prepared for an unusually powerful, early-season snowstorm which swept across upstate New York and northern New England over the weekend.
October snowfall is rare in New York; there had been just three October days with measurable snowfall in Central Park since record-keeping began 135 years ago, according to the U.S. National Weather Service.
However, the sharp jump in prices prompted some investors to sell their position and lock in gains, as investors turned their attention to forecasts showing mild weather in the coming weeks.
The Commodity Weather Group said earlier that after a short period of cooler weather expected later this week, temperatures should “lean to the warmer side” along the East Coast over the next six to 15 days.
The weather group added that “cool-to-cold weather” should follow later in the month.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts for late October and early November on heating demand.
Meanwhile, concerns over rising U.S. production levels also weighed. Industry research group Baker Hughes said Friday that the number of active rigs drilling for natural gas in the U.S. last week rose by seven to 934, the fifth gain in seven weeks and just shy of a nine-and-a-half month high of 936 hit two weeks ago.
Natural gas traders closely watch the rig count to gauge future supply growth. A drop to the 800-rig-level would be necessary to begin to balance the market, according to Baker Hughes.
Elsewhere on the Nymex, light sweet crude oil futures for delivery in December fell 1.07% to trade at USD92.33 a barrel, while heating oil for December delivery shed 0.64% to trade at USD3.046 per gallon.
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