Forexpros – Natural gas futures were sharply lower on Wednesday, re-approaching the previous session’s two-week low as warmer-than-normal winter weather forecast for the U.S. East Coast was likely to reduce heating demand.
On the New York Mercantile Exchange, natural gas futures for January delivery traded at USD3.433 per million British thermal units during U.S. morning trade, tumbling 1.58%.
It earlier fell by as much as 1.25% to trade at a daily low of USD3.428 per million British thermal units, hovering close to the previous day’s two-week low of USD3.404.
Industry weather group MDA Federal said earlier that the U.S. Northeast and Midwestern states were expected to be warmer-than-normal in the next six-to-ten-days.
The U.S. Northeast and Ohio Valley region may be 5 to 7 degrees above normal, according to MDA.
The Commodity Weather Group forecast a similar weather outlook for the region, adding that temperatures around the Great Lakes-area were expected to be up to five degrees above normal throughout the period.
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.
Prices came under additional pressure after the U.S. Energy Information Administration said Tuesday that natural gas prices in 2012 will average USD3.70 per million British thermal units, down from a previous estimate of USD4.13, citing rising natural gas supplies.
In its monthly Short-Term Energy Outlook released Tuesday, the EIA expects working gas in storage to end the winter season at a record high of 1.83 trillion cubic feet at the end of March 2012.
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 2 on Thursday.
Early injection estimates for next week’s storage data range from a buildup of 12 billion cubic feet to a drawdown of 34 billion cubic feet.
Elsewhere on the NYMEX, light sweet crude oil futures for delivery in January dropped 1.2% to trade at USD100.06 a barrel, while heating oil for January delivery slumped 0.95% to trade at USD2.992 per gallon.
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