Forexpros – Natural gas futures were down for the fourth consecutive day on Tuesday, dropping to an eight-day low as sentiment on the heating fuel remained bearish amid forecasts for mild March weather that was expected to limit demand.
On the New York Mercantile Exchange, natural gas futures for delivery in April traded at USD2.531 per million British thermal units during U.S. morning trade, tumbling 2.75%.
It earlier fell by as much as 3.25% to trade at USD2.523 per million British thermal units, the lowest since February 16.
The March contract expired at the end of Monday’s trading session at USD2.446 per million British thermal units, making April the new front-month benchmark.
Market participants noted that April is considered a transition month for natural gas, no matter the temperature.
Futures contracts tend to trade more lightly during spring months because demand for heating is weak and natural gas-fueled power plants have yet to step up production to serve air conditioners.
Natural gas prices have lost nearly 10.5% in the past four trading sessions, as traders focused on mild weather expected throughout March.
The Commodity Weather Group said earlier that the U.S. Northeast and Ohio Valley-states may become much warmer than normal by the second week of March, dampening demand for the fuel.
The above-average weather outlook comes after the CWG said last week that March was forecast to be 13.5% warmer than March of last year.
According to private forecaster MDA EarthSat, temperatures were expected to be 8 to 14 degrees Fahrenheit (4.4 to 7.8 Celsius) above normal from Ohio to New England from March 9 through March 13.
“An already very warm map has turned even warmer in this time frame,” MDA said in a report earlier.
Winter so far in the U.S. has been the second mildest since 1950. It is running about 13% warmer than the 30-year normal, according to recent data from MDA EarthSat.
Inventory withdrawals this winter are running nearly 510 billion cubic feet below average, or about 29%, due to the lack of heating demand this winter.
Last winter at this time, cold weather conditions led to a decline of more than 2 trillion cubic feet from U.S. storage to help meet the surge in heating demand. In contrast, only 1.3 trillion cubic feet of storage gas has been burned this winter season, a 37% drop.
Total U.S. natural gas storage stood at 2.595 trillion cubic feet as of last week, 41% above year-ago levels and 40% higher than the five-year average for this time of year.
Early withdrawal estimates for Thursday’s storage data range from a decline of 80 billion cubic feet to 104 billion cubic feet, compared to last year’s drop of 85 billion cubic feet and the five-year average decline for the week of 118 billion.
Market analysts expect natural gas prices to retest January’s ten-year low of USD2.319 per million British thermal units, amid expectations U.S. gas inventories will end the winter at a record high 2.215 trillion cubic feet.
That’s 43% above the five-year average and well above the previous record of 2.148 trillion cubic feet set in 1983.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in April eased down 0.15% to trade at USD108.39 a barrel, while heating oil for April delivery shed 0.37% to trade at USD3.270 per gallon.
Forexpros
