Forexpros – Natural gas prices were down heavily on Tuesday, trading close to a 28-month low as warmer-than-normal winter weather in major gas-consuming regions in the U.S. dampened demand expectations for the heating fuel.
On the New York Mercantile Exchange, natural gas futures for February delivery traded at USD2.954 per million British thermal units during U.S. morning trade, tumbling 1.88%.
It earlier fell by as much as 2.1% to trade at USD2.946 per million British thermal units, the lowest since January 3, when prices dropped to the lowest since September 2009.
Prices traded below the psychologically-key USD3.00-threshold as sentiment on the heating fuel remained downbeat after the Commodity Weather Group said earlier that a mass of cool Arctic air was expected to spare the U.S. East Coast over the next six-to-ten days, descending over the U.S. Great Plains region instead.
Meanwhile, MDA Federal’s six-to-ten-day forecast called for above-average temperatures across much of the Midwest, after previously forecasting normal temperatures in the region and below-normal temperatures on the East Coast.
Industry group Weather Derivatives said that U.S. heating demand from January 11 through January 17 will continue being below seasonally-normal levels for this time of year.
Average heating degree days in the U.S. have failed to reach normal levels for 11 straight weeks, the group said earlier.
Natural gas futures have closely tracked weather forecasts in recent weeks. Below-normal winter temperatures increase the need for gas-fired electricity to heat homes, boosting demand for natural gas.
Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.
Gas futures typically climb during the winter months, as temperatures fall and demand for heating fueled by natural gas rises. But mild winter weather coupled with high inventory and production levels in the U.S. have kept prices depressed near 28-month lows in recent weeks.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in February climbed 1.24% to trade at USD102.56 a barrel, while heating oil for February delivery rose 0.72% to trade at USD3.095 per gallon.
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