Forexpros – Natural gas prices edged higher on Tuesday, easing off a 27-month low as extended U.S. weather forecasts showed cold winter weather was expected to arrive in mid-January, however lingering concerns over elevated U.S. inventory levels kept gains in check.
On the New York Mercantile Exchange, natural gas futures for January delivery traded at USD3.109 per million British thermal units during U.S. morning trade, gaining 0.42%.
It earlier rose by as much as 0.7% to trade at a daily high of USD3.139 per million British thermal units.
Prices fell to USD3.050 on Monday, the lowest since September 11, 2009, when futures last traded below the psychologically-important USD3.00 level.
The Commodity Weather Group said earlier that colder weather conditions were appearing in Texas and other parts of the southeast U.S., while some models suggested a colder trend could appear across the U.S. East Coast in mid-January.
Despite some small signs of cold, overall, warmer temperatures are still expected to hold across most of the U.S. The forecaster said “it is still a struggle to see much in the way of significant cooling.”
According to the weather group, December may finish 15% warmer than last year, based on natural gas-weighted heating degree days, while January could be 7.8% warmer than in 2011.
Natural gas prices have closely tracked weather forecasts in recent weeks. Above-normal winter temperatures reduce the need for gas-fired electricity to heat homes, dampening demand for natural gas.
The January natural gas contract has lost nearly 15% since the beginning of December, as record high storage levels in the U.S. and forecasts of warm December weather drove down prices to the lowest level since September 2009.
Meanwhile, markets were looking forward to the U.S. Energy Information Administration’s weekly report on U.S. natural gas stockpiles for the week ended December 16 on Thursday.
Early injection estimates range from a decline of 93 billion cubic feet to 110 billion cubic feet. Stocks fell by 181 billion cubic feet the same week a year earlier, while the five-year average change for the week is a drop of 140 billion cubic feet, according to U.S. Energy Department data.
Currently, total U.S. natural gas supplies stand at 3.729 trillion cubic feet, up 5% from a year earlier and a record high for this time of year.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February soared 3.15% to trade at USD97.02 a barrel, while heating oil for January delivery rallied 2.6% to trade at USD2.853 per gallon.
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