Forexpros – Natural gas futures fell sharply on Monday, tumbling to a four-week low as warmer weather forecasts and lingering concerns about growing U.S. inventories continued to dominate market sentiment.
On the New York Mercantile Exchange, natural gas futures for December delivery traded at USD3.489 per million British thermal units during U.S. morning trade, tumbling 2.66%.
It earlier fell by as much as 2.85% to trade at USD3.477 per million British thermal units, the lowest price since October 13.
The Commodity Weather Group said earlier that the central U.S. states may be warmer-than-normal trough the end of November, while forecasting seasonably-normal weather for the U.S. Northeast during the same period.
“While the pattern is not completely locked on the warm side, the warmer events tend to last longer and are stronger for the eastern two-thirds over the next two weeks,” the weather group said in a report.
Meanwhile, industry weather group MDA Federal said earlier that it expected temperatures in the Northeast to remain 3 to 4 degrees Fahrenheit (1.6 to 2.2 Celsius) warmer-than-normal through November 28.
Since the beginning of November, natural gas futures have fallen nearly 11.5%, as mild weather in key gas-consuming regions in the U.S. limited early-season heating demand.
Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts for late October and early November on heating demand.
Meanwhile, concerns over rising U.S. supply levels also weighed. Currently, 3.831 trillion cubic feet of gas is in storage, putting it on track to exceed last year’s record high of 3.837 trillion cubic feet by next week.
On Friday, Wall Street investment bank Morgan Stanley estimated that natural gas prices will average around USD3.85 per million British thermal units next year, citing high U.S. production and inventory levels.
“Growing production has been the key driver of price weakness since 2008, a trend that we expect will continue into 2012,” the bank said in a report.
Elsewhere on the Nymex, light sweet crude oil futures for delivery in January fell 1.36% to trade at USD97.55 a barrel, while heating oil for December delivery eased up 0.11% to trade at USD3.174 per gallon.
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