Forexpros – Natural Gas futures prices plummeted more than 5% on Wednesday, hitting 28 month lows, as weather forecasts continue to point toward a mild U.S. winter.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.769 per million British thermal units during late U.S. trade, plummeting 5.85%
Prices are trading below the psychologically critical USD3.00 level as bearish sentiment was exasperated after the Commodity Weather Group stated that temperatures on the U.S. East Coast will likely remain mild.
The weather group furthered the bearish environment by explaining that the period between November 1st to January 8th was the third warmest in the last century.
Natural gas futures have closely tracked weather forecasts in recent weeks. Above average temperatures decrease the need for gas fired electricity to heat dwelling and businesses, reducing the demand.
Word of increased supply via so called “super fracking” in the U.S. further depressed prices of natural gas futures.
Bank of America-Merrill Lynch cut its 2012 natural gas price forecast to USD3.30 BTU’s from the earlier estimate of USD4.30BTU’s.
The report added that prices were expected to fall below USD2.00 BTU by October, 2012.
Meanwhile, U.S. Energy Information Agency’s weekly report on natural gas stockpiles will be released Thursday.
Elsewhere on the NYMEX, light sweet crude oil futures for February settlement gave back 1.34% to trade to USD100.88 a barrel.
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