Forexpros – Natural gas futures were down sharply on Monday, tumbling to a two-week low as investors shifted their focus to mild weather which was expected to limit heating demand.
On the New York Mercantile Exchange, natural gas futures for January delivery traded at USD3.487 per million British thermal units during U.S. morning trade, tumbling 2.69%.
It earlier fell by as much as 2.9% to trade at USD3.478 per million British thermal units, the lowest since November 21.
Industry weather group MDA Federal said earlier that a warming trend across the U.S. Northeast and Midwestern states was expected as far out as the next 11-to-15 days.
According to weather service provider AccuWeather, the high temperature in Chicago on December 4 will be 46 degrees Fahrenheit (8 Celsius), seven degrees above normal.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts for late November and early December on heating demand.
Above-normal winter temperatures reduce the need for gas-fired electricity to heat homes, dampening demand for natural gas.
Concerns over record-high supply levels in the U.S. also added to the selling pressure. Currently, total U.S. natural gas storage stand at 3.851 trillion cubic feet, hovering below late November’s all-time high of 3.852 trillion cubic feet.
Stockpiles are 7.3% above the five-year average and 1.1% higher than the same period last year, underlining the view that U.S. gas supplies are sufficient to meet the needs of even an unusually harsh winter.
U.S. inventories typically increase during the so-called “shoulder season”, the period in autumn after air-conditioning demand falls but before heating begins.
But this year’s increase, aided by unusually warm temperatures, offers a much larger cushion than in most years as winter approaches.
Global financial service provider Barclays recently said that prices were expected to remain under pressure in the near-term, citing a U.S. supply glut.
“With inventory levels at record levels, even a cold winter would not put the U.S. gas market on a bullish path,” the lender said in a report.
Elsewhere on the Nymex, light sweet crude oil futures for delivery in January rallied 2.2% to trade at USD98.89 a barrel, while heating oil for January delivery jumped 1.9% to trade at USD2.996 per gallon.
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